Friday, January 28, 2011

Timothy Geithner Condemns His Own Policies at Davos

Today at the Davos Economic Forum, US Treasury Secretary Timothy Geithner told his audience that the debt profile of the United States is not sustainable in the long term.
I feel sure that gives great comfort to every American, and probably to a lot of her enemies, as well.
Why, Oh why, tell me, dear readers, would an American Secretary of the Treasury reveal that he does not agree with the fiscal policy he is responsible for? Could it have been a moment of unfettered truth-telling while speaking before an international audience which does not vote? Or did he read the wrong speech - was it really the lecture he was preparing to give to Fed Chairman Ben Bernanke in order to make him stop the printing presses that are making of the American fiscal position a house of cards?
Surely, the President knew what Geithner was going to say. No political appointee speaks publicly without Secretarial clearance (for sub-secretary appointees, as I was) or by the White House for Secretaries.
So, (1) what message were Geithner and Obama sending, and (2) to whom?
If the answer is (1) stop printing money, and (2) the recipient was Bernanke, wouldn't a phone call have worked much better, and without once again throwing the American fiscal mess up for worldwide viewing.
But, if the answer is (1) we know what we are doing and we're going to continue until it works or we are finally bankrupt for lack of government bond buyers (e.g., China), and (2) the recipient was China, which is footing the bill for our printing presses, wouldn't a phone call have been better so that China's dilemma was not thrown up once again for all the world to see.
Europe is gliding down the same path we took after Obama was elected, because of the recent sale of government bonds of Eurozone countries - bonds that aren't backed by anything more solid than the words of Jean-Claude Trichet, European Central Bank president, and Angela Merkel, German Chancellor, whose own court system is now considering whether she even has the right to put up good German money to prop up the Eurozone. In Europe, it’s both China and Japan who are buying. Was Geithner trying to tell the Eurozone it's all right. America is doing it and you can, too?
Maybe Tiny Tim just got ahead of himself, not for the first time. Maybe he just swung from the hip without understanding the impact of his statement -  such as gold's price rising this afternoon and Wall Street falling after a few days of decent results that gave many analysts hope that a recovery was honestly underway.
Perhaps Geithner doesn't care about recovery. Maybe he wants to walk down the path to oblivion. Maybe he doesn't even care if he takes America with him.
But, Tim, a lot of us do care. So, please do two things for America : (1) shut up, and (2) stop spending and find a less expensive way to create jobs - like freeing up American businesses from regulation and heavy taxes and the Obamacare burden so they can create the jobs that your printing presses cannot.
Oh, yes, there is something else you could do. Resign. Let somebody who actually understands the problem have a try at solving it.

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