At least Ben Bernanke isn’t the only person in government who doesn’t really understand our monetary system. Over the weekend Tim Geithner paraded himself all over the weekend talk shows while he proved that he barely deserved to pass econ 101. That’s right, the Secretary of the US Treasury doesn’t get it.
The interviews mostly began with Mr. Geithner distancing himself from the entire cause of this crisis. Although he was effectively the fox in the hen house (he was President of the NY Fed while we experienced the grossest bank expansion/leveraging experiment in the history of the world) Mr. Geithner continues to make it sound as if he was saddled with this problem and played no role in its cause:
“I, I think I disagree slightly in the sense that, you know, remember, this was a recession caused by a set of policies that left us with a $1.3 trillion deficit when the president came into office, an economy that was falling off the cliff. Millions of Americans had already lost their jobs. The recession was a year old at that point.”
Mr. Geithner goes on to explain that there is no chance of a double dip (famous last words?). He displays absolutely zero sense of risk management and prescience. This shouldn’t be surprising to anyone. It is the tendency of government officials to adhere to the scientific method – “let’s wait for the dust to settle before we make our next moves”. Unfortunately, that’s not how markets work and it’s certainly not how economies work. Mr. Geithner is blindingly optimistic:
“MR. GREGORY: So just to be precise, you do not believe in a double-dip recession, that it will get worse before it gets better?
SEC’Y GEITHNER: No, I don’t. I think the most likely thing is, you see an economy that gradually strengthens over the next year or two, you see job growth start to come back again.”
The latest Rasmussen Reports national telephone survey of Adults shows that just 35% believe the U.S. economy will be stronger in one year’s time. Forty-five percent (45%) believe the economy will be weaker one year from now.
Those results signal the highest level of pessimism since regular tracking began back in January 2009. Belief that the economy will be stronger has been trending down for a year now. The number who say the economy is getting weaker is up eight points from May.
Half of American adults (50%) say the economy will be stronger five years from now, a number that has held relatively steady for the past several months. However, 62% felt that way back in January of last year.
One-in-four adults (25%) believe the economy will be weaker in five years, also showing little change from the past two surveys but higher than it was in all of last year.
July 2010
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Tags: Ben Bernake, Economy, Federal Reserve, Media, News Item, Politics, Tim Geithner, Treasury Department, Video, videos
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