Today’s must read MSM piece is a NYT OpEd by Treasury Secretary Tim Geithner, Welcome to the Recovery. I have been critical of Geithner’s reign at Treasury, and even more so of his former role as President of the NY Fed.
But today’s commentary is fascinating: What he writes is, for the most part, true. However, it does not quite paint a fully accurate picture. It tells only half of the story of the recovery, while ignoring the long term costs:
"¢ Exports are booming because American companies are very competitive and lead the world in many high-tech industries.
"¢ Private job growth has returned "” not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months.
"¢ Businesses have repaired their balance sheets and are now in a strong financial position to reinvest and grow.
"¢ American families are saving more, paying down their debt and borrowing more responsibly. This has been a necessary adjustment because the borrow-and-spend path we were on wasn't sustainable.
"¢ The auto industry is coming back, and the Big Three "” Chrysler, Ford and General Motors "” are now leaner, generating profits despite lower annual sales.
"¢ Major banks, forced by the stress tests to raise capital and open their books, are stronger and more competitive. Now, as businesses expand again, our banks are better positioned to finance growth.
"¢ The government's investment in banks has already earned more than $20 billion in profits for taxpayers, and the TARP program will be out of business earlier than expected "” and costing nearly a quarter of a trillion dollars less than projected last year.
If you have ever wondered why some people progress within organizations, this is a perfect example. Say what you will about the Treasury Secretary’s understanding of the crisis or his policies at the NY Fed or at Treasury, he knows how to make his boss happy. I doubt there is anyone at the White House unhappy with him today.
I will go into greater detail in the future, but I just had to point out this little tidbit:
According to a report released last week by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively, the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing. The study showed that government action delivered a powerful bang for the buck, and that the bank rescue on its own will turn a profit for taxpayers.
That is now our standard — what was done versus doing nothing? That is truly the wrong counter-factual (more on this tomorrow).
The bottom line: Timmy’s job is safe for the foreseeable future.
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Source: Welcome to the Recovery TIMOTHY F. GEITHNER NYT, August 2, 2010 http://www.nytimes.com/2010/08/03/opinion/03geithner.html
Who, exactly, does he mean by “we”?
saw this last nite too: Treasury Secretary Timothy Geithner talked about how the recently-passed financial regulation bill @ NYU Sterns School of Bus http://www.c-spanvideo.org/program/id/229661
And you’re right – this is exactly what goes on in all large organizations, private or public. The crafty folks who are able to deflect blame, push real problems onto others, while making it SEEM like they’re saving the day right now, are always the ones who climb the latter. Long term thinking and actually trying to solve the actual problems is for suckers.
“…the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing.”
In addition to assuming an odd counterfactual, it’s a pretty astounding claim. I mean, if an analyst said that his model showed the CEO of MegaCorp was responsible for $8.5 billion in profits “relative to what would have happened if he had done nothing”, while the income statement showed MegaCorp losing $7.2 billion over the CEO’s tenure, I’d be pretty skeptical. That doesn’t mean the claim is wrong, or course. But it’s still pretty astounding.
Geithner is talking to his buddies, that’s all. The rest of us are peeking through the key hole.
In studying leadership for my MBA, the ones who progress are those who network effectively and latch their lips onto the right people, not competent managers who strictly do their jobs.
When you are arguing with tea-partiers who wanted gobinment to not have done anything, then the standard is a comparison to not doing anything at all. If we had followed their "let it crash and burn" ideology then the economy would have lost 900 billion per year and U3 unemployment would have been around 16-18%. The loss of 8.5 million more people this year doing nothing, is a loss of productive work that could never have been recovered again. The 900 billion loss, per year, to the economy has to be brought out when tea-partiers complain about the 400 billion per year invested in the stimulus package as something we cannot afford.
If you are talking to sensible people who are not happy with the way our financial sector was bailed out or the specific things that the stimulus package was invested in, then the standard (as always) have to be what worked and what didn't. The good news is that the Obama administration insisted on collecting detailed data on the use and effects of the stimulus money "“ so for those interested we will soon be able to have that discussion based on facts. Hopefully there are still a few conservatives left who have not been completely Foxified and can enjoy a fact-based debate.
As purple says, above, it depends on whose eyes you read this through. The number of people insulted by Timmy’s claims is not a small one.
Nice Strawman, DeDude. You’re very adept at building those up to take them down. There were/are MANY actual non-thinking tea-partiers who didn’t think the choice was either we do it THIS way or NOTHING at all. There were other better choices that would have actually helped the real economy but when you’re looking at everything through a political prism, it’s almost impossible to see or acknowledge that. Yawn.
That too, BDW, but deflecting blame and kicking it onto others, while APPEARING to save the day is enormous as well.
The Bullshit-o-Meters around the world are simply off the charts!
"¢ The government's investment in banks has already earned more than $20 billion in profits for taxpayers
Of really? you mean $189Billion from AIG has been repaid? What about Maiden Lane 1,2 and 3? Are they all “marked to market”? and $1250B Fed MBS crap, is that also in the black? How about $1trillion or more that will be needed to “fix” Fannie/Freddie?
That Beavis look-alike (and think-alike) definitely feels no shame lying and and distorting the facts like that. You’ve got to give him that. I wonder what his escape plan is when “the reign of terror” commences here. And on top of that he’s got the balls to involve Rogoff and Reinhart, the authors of a preeminent research book that spells out what exactly the Geithner’s own policies will lead to? I am really speechless…
Strategic Default = Paying down your debt.
“That is now our standard "” what was done versus doing nothing?”
Sadly, it is even worse "” it is: “That is now our standard "” what was done versus what we think would have happened if we had done nothing?”
There is a piece linked to over at Infectious Greed that is worth perusing in this regard: http://www.city-journal.org/2010/20_3_social-science.html
And economics is no more than a social science at this point … at least until we start doing practical experiments, like dividing the nation and trying one approach on one half and another on the other half, and after a suitable period of evaluation, making the “winner” the national standard.
Of course, nobody is going to stand for being a guinea pig in that manner, so we are all guinea pigs in this unverifiable, random, nonsensical approach to expanding our knowledge base on economics. (Actually, it isn’t even that, it’s an experiment in politics, not economics or economic policy)
I love it when econimists pull numbers out of their estimates and Moody's Analytics models of the U.S. economy to tell what would have happened and how many jobs were saved as a result.
According to some, estimates and models are transformed into facts.
This report is filled with declarations such as the following,
“Estimating the economic impact of the policies is not an accounting exercise, but an econometric one. It is not feasible to identify and count each job created or saved by these policies. Rather, outcomes for employment and other activity must be estimated using a statistical representation of the economy based on historical relationships, such as the Moody's Analytics model.”
“But modeling the vast array of financial policies, most of which were unprecedented and unconventional, required some creativity, and forced us to make some major simplifying assumptions.”
John B. Taylor has some intersting views on the subject worth looking at.
http://www.johnbtaylor.com/
http://johnbtaylorsblog.blogspot.com/2010/07/more-on-blinder-zandi-working-paper-on.html
And a PBS discussion with Zandi here. http://www.pbs.org/newshour/bb/business/july-dec10/economy_07-29.html
Welcome to the new USSR, comrade.
Mannwich; sorry but the only thing you hear from the Tea-partiers and their leader Glen Beck is to get gobinment out of this and leave it to the free market forces. There may be individual tea-partiers who have other ideas "“ but I have not heard any of them. I personally support the idea of bringing the deficit down "“ but have yet to hear any realistic and specific proposals coming out of the tea-party. It's all the old BS about "cutting waste" with absolutely no specifics about how much and where. They also say nothing about what taxes to raise and quite a few are stupid enough to think that we can get rid of the deficit without raising revenues. I understand the political problem of becoming specific and standing for more than just "mother and apple pie", but if they can't, then they are no better than the political parties they are raging against and presumed to be an alternative to.
As said before, I was against the way the banks were bailed out "“ I wanted the Swedish solution not a handout to the banksters. But all I have seen from Glen and his tea-partiers is "no handouts", where is their official alternative to the handouts?. I wanted a stimulus plan that was 100% public infrastructure investment and unemployment support in the first year, followed by a $1000 tax rebate in the second year. All I have seen from Glen and his tea-partiers is "we couldn't afford this gobinment stimulus giveaway", where is their official alternative to doing nothing. The most absurd thing is that they now are talking about the need to continue the Bush tax cuts for the rich as if we couldn't possibly afford 40 Billion for the unemployed, but affording a 400 billion handout to the top 1% is no problem. If tax cuts for the rich, enacted 2 years after the beginning of the crisis, is their answer "“ then they are just a freaking joke.
Constantnormal@11:12;
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