The Sydney Morning Herald summarizes former Australian PM Paul Keating’s recollections of Tim Geithner. Paul Keating was Labor politician with particularly close ties to Indonesia. Now I don’t know how much of this is Keating grinding his axe, but I reproduce the gist of it on an FYI basis.
When Barack Obama announced his champion to rescue the world from economic ruin, it was the first time most Americans had ever heard the name Tim Geithner. … If anyone in the US media had thought to ask a former Australian prime minister for his assessment, they would have heard a different view. And they would not have been so surprised at Geithner’s performance since. …
“Tim Geithner was the Treasury line officer who wrote the IMF [International Monetary Fund] program for Indonesia in 1997-98, which was to apply current account solutions to a capital account crisis. … It takes a gigantic fool to mess that up. But the IMF messed it up. The end result was the biggest fall in GDP in the 20th century. That dubious distinction went to Indonesia. And, of course, Soeharto lost power. … The IMF is the gun that can’t shoot straight. They’ve been making a mess of things for the last 20-odd years, and the greatest mess they made was in east Asia in 1997-98, so much so that no east Asian state will put its head in the IMF noose. …”
Intriguingly, Keating claims that it was the traumatic experience of the IMF’s intervention that made China build up a staggeringly large warchest of funds. The reason: never to be forced to go to the IMF again.
“These reserves are so large at $US2 trillion as to equal $US2000 for every Chinese person, and when your consider that the average income of Chinese people is $US4000 to $US5000, it’s 50 per cent of their annual income. It’s a huge thing for a developing country to not spend its wealth on its own development.”
Is this some flight of Keatingesque fancy? The former deputy governor of the Reserve Bank of Australia, Stephen Grenville, doesn’t think so: “After the Asian crisis, the countries of east Asia decided that they would never go to the IMF again. The IMF is taboo in east Asia. Look at the evidence. The revealed preference of the region is that no one has gone to the IMF since, even when they needed the money.” …
Keating went on to argue that, by frightening the Chinese into building their vast $US2 trillion foreign reserves, Geithner was responsible for the build-up of tremendous imbalance in the world financial system. This imbalance, in turn, according to Keating, contributed to the global financial crisis which has since devastated the world economy.
So should we believe Keating? Not necessarily. But it does mean the public should look closely at how the shells are being swapped around the table. Don’t lose sight of the bean folks. Don’t lose sight of the bean.
So, if Keating is to be believed, Geithner destroyed the modern world, starting with the Far East a decade ago and is now coming ’round to finish off the West–I wonder what he does for an encore.
(It also makes you wonder if anyone at all is vetting any of Obama’s appointments at a level that would a McDonald’s manager in Southern California look incurious.)
I don’t think finance or politics is like religion, when we talk about things we can only approach through parables because the phenomenon we are talking about can’t be described in terms of smaller models. Finance or politics, at least in the short run, is amenable to rational analysis. We should be able, at the minimum, of measuring whether we are better or worse off. That’s the equivalent of knowing whether you going up or going down in the hills.
My problem with the current debate, and I getting repetitive in saying this, is that there’s no clear way of assigning correspondences between what our leaders do and what we observe happening in the economy. That’s like taking a step and not knowing whether it brings you up or down. That is the serious problem; and if we don’t solve that problem, there’s no use talking about thousand mile journeys to the promised land.
So when I am asked, do I believe in Keating? My answer would be turn it around and say, “how do I know Geithner is doing the right thing”. Because if he’s doing the right thing, then Keating can go jump in the lake. But if he’s doing the wrong thing, what Keating believes doesn’t matter anyway, though if it coincided with Keating’s observations, then you’d have to say that he probably had a decent assessment of Geithner.
But that’s neither here nor there. This is not a question of reputation, or he said, she said. This is a public policy problem. The question to my mind, and the only question, is whether the approach being taken by the Obama administration is taking us up or down. If we don’t know, then let’s identify the information we need to gather to answer the question and how long we must look at the data before reaching a reasonable conclusion. Otherwise we are lost.
“he probably had a decent assessment of Geithner.” Decent! hell he hit the nail on the head! Just look at the last couple weeks performance from Geithner, “G” talks like an idiot, walks like an idiot and is sending the American (where America goes the West follows) financial system down the tubes! I believe “0″ is fully aware of “G” talent, “G” is just another useful idiot to throw under the bus as soon as enough people ask why “0″ is failing in the Financial arena! by the time any sizeable number of corrupted congress men stops believing in the hyped “give me time” or “I WON” or the diming “Hope and Change” message it will be all ready over, the Great American Experiment will be TOAST! already the Hyped recession claims of the campaigns (there had been no quarter with out growth at that time) have lead to recession which is morphing into the already hyped American Melt down which is coming to the point of fulfillment.
We are witnessing Chicago Politics on a global scale. The only question is whether the US economy is robust enought to counteract the effects of this kind of dealing.
And, of course, you all know that tax-cheat Timmy’s father ran the Ford Foundation grants in Indonesia, where he funded, supervised, and met with Stanley Ann Dunham Obama Soetero, right?
Small world, ain’t it?
I lost sight of the bean. What now?
Keating, a former Treasure and Prime Minister, is a Labor Party (Democrat) man, and this should be taken into consideration when evaluating his remarks.
@ 5. gokart-mozart
Now we do.
I wonder if Stanley Ann Dunham Obama Soetero and Geithner’s father knew Mochtar Riady? Now THAT would be a really, REALLY small world.
Wretchard,
You wrote: “let’s identify the information we need to gather to answer the question and how long we must look at the data before reaching a reasonable conclusion.”
Unfortunately, the markets have been doing this and they are tanking.
While Obama might point to the stock market as reacting to something he inherited (not true – they are reacting to where we are going), or are short sighted and are not looking at the longer term horizon. The bond markets are looking at the long term horizon and they don’t like what they see either. Interest rates on 10 year Treasuries have shot up a full percentage point in the past month.
Hard Gasparino and Kudlow last night talking about how Volker is being shut out and Geithner and Summers can’t work together – and apparently no one in Treasury wnats to work with Geithner for some reason.
Seems to me that the failure to do deal with the banks and yet pursue these education, health, and other ancillary issues is more than matter of incompetence or the usual kind of political blindness. At this point it’s a little bizarre. Citigroup is trading ~ $1….
*Heard
Reagan successfully sold the “hold the line” argument in the early eighties, so this is a case study in comparison (of leadership style, not policy). If I’m remembering my history correctly (I 7 at the time) there was also some unease regarding the supply-side approach. Unemployment levels are starting to reach early 1980s levels, so I am looking with great interest to see if Krauthammer’s prediction (Obama will own the economy after 6 months in office) works out.
In a political sense, however, we seem to forget that for the vast majority of Americans there is NO independent press. There is the half that don’t care, so they wouldn’t know if an earthquake dumped LA into the ocean until a week later. Then there are those that get their political insights from late night, SNL and John Stewart… they may not even know Bush isn’t president anymore! They don’t know the market is tanking. They may have lost their job, but that will, again, be vaguely connected to Bush’s ‘failed policies of the last eight years’. So, politically speaking, how would regular voters have any clue we are being sucked into the fifth level of hell, even if there were clear indicators that this was happening?
Bottom line… Washington Republicans are going to have to get nasty if they want to get noticed. Health Care? “Obama wants to kill people.” Education? “Obama wants black kids to be stupid.” Energy, the economy, global warming? “Obama is an ignorant fool… Oh, are you listening to me now? Good. Now that I have your attention…”
Anybody who thinks the IMF screwed up in Asia should look at their work in Africa.
And Geithner’s income tax experience demonstrates either his inattention to detail or his willingness to flip off the system.
Not good, folks. Not good.
As I said in a previous post, quoting Steven Sondheim’s song “Send in the clowns”: “don’t worry, they’re here.”
F
I do not see obama selling this. Reagan knew what he was doing, and we had just come out of the Carter years. He will try though, and the media will help, he may be able to drag out is credibility for a year.
We are in much worse shape in capital markets now than back then, and the economy was much less global. There was a string middle class with string values.
Also, the recession did not come so soon for Reagan in his first term as this crisis did for Obama. He had established his credibility. People forget how popular Reagan actually was, what resonance he had with the nation–we tend to remember the MSM attacks more than his winning way with the electorate.
Maybe it is just me, but I do not see anyone besides the true believers standing beside Obama. He just does not inspire trust; he inspires anxiety and distrust.
(maybe I am out of touch though on this score.)
I am a big Reagan fan, of course, but even his detractors marveled at how he could truly move people and speak to the best in them. He was a great leader–one of the greatest. Obama and Co. can just manipulate people. They grub around inside electorate’s souls to pull at thier worst fears and loathings. They are emotional vampires.
And then there is the simple fact that Reagan happened to be right…
His credibility^
StrOng middle class^
(sorry)
Keating is correct in his assertion that the IMF’s nostrums are now treated with scepticism in Asia. But he is more broadly incorrect that China’s vast foreign reserves are a direct ‘but for’ result of IMF failure during the ’97 financial crisis. China would have accumulated those reserves regardless of how the IMF fared — most Chinese are culturally predisposed to saving for a rainy day anyway, and China is politically disinclined to go cap in hand to foreigners asking for a bailout, especially when an IMF loan almost always comes with strings attached.
IMF intervention, like any foreign intervention in Chinese affairs, is always a politically bitter pill to swallow. For one thing, it would gravely undermine the CCP’s political competence, and the Chinese saw the consequences of such an undermining when Suharto was deposed.
The IMF’s abject performance during the Asian Finance Crisis merely confirmed Chinese prudentialism — but it didn’t cause it.
As for whether China’s foreign reserve holdings and trade imbalances significantly “contributed to the global financial crisis,” that point is a specious one. China may have contributed to the inflow of liquidity and easy capital, but that hardly justifies the profligate spending and unsafe loan instruments underwritten by reckless banks and backed up by worthless credit-rating agencies in the West. Just because it’s cheap doesn’t mean one should be imprudent. Excess liquidity may have set the conditions, but it isn’t a fundamental evil, and by itself can’t be the cause of the current crisis.
SQ (#18) that is a good assessment of Chinese mentality and Culture for the situation and I agree with it, The Chinese with the exploded trade growth really couldn’t spend what it brought in anyways so it would have built up, the problem is we can talk and talk about the ship sinking but we are the lower class locked below deck that drowned while the rest escape in the few life boats available, we ain’t got no pray of getting this corrected in time, the captain has the crew mesmerized and they ain’t listen to the rift raft below deck, by the time they get it they will simply give up and get on the boats that are sailing leaving the ship to sink!
Clue: Former Australian PM Paul Keating thinks that Tim Geithner was incompetent as an IMF Officer.
Consequence? Geithner was promoted to a Federal Reserve Bank Chairman Post.
Clue: Geithner messed up his personal income tax, using tax software that apparently millions of others use successfully to do their Federal Income tax.
Consequence? Geithner is nominated and approved by the Senate as US Treasury Secretary at one of the most crucial moments in the last 50 years.
Clue: Apparently Geithner is not on good speaking terms with Larry Summers, former Treasury Secretary in the Clinton Administration, and not on good speaking terms with Paul Volker, former chairman of the Federal Reserve Banking system.
Consequence? The equity markets are selling off with no bottom in sight, stock for one of the largest financial institutions in the world (CitiGroup) is trading at around $1 a share. Wall Street is voting “no confidence”.
Conclusion: Either Geithner is a modern day Mephistopheles, or else the best example of the Peter Principle in years.
The term “stuck on stupid” also comes to mind.
Who most profited from the crash of Indonesia’s economy and currency? George Soros, that’s who. Now, connect the dots. Soros is, in my estimation, the power behind the throne vis-a-vis the new lackey Barry O. So, then, is there some faint whiff of the violation of an arms’ length transaction between George Soros and the Geithner who worked for the IMF at the moment of Georgy’s handsomely profitable opportunity?
This is class warfare, folks. All us normal people, rich and poor, versus THEM. And I don’t mean the giant ants.
Malaysian Prime Minister Mahathir Mohamad made public statements.
Folks who think this is incompetence we are seeing, are i’m very much afraid, quite wrong.
From Drudge:
NYT SUNDAY: Obama can not assure economy will grow again by end of year; Urges Americans not to ‘stuff money in mattresses’… Developing…
So this would be more talking down the economy when that’s the last thing he should be doing right now.
ECM: This is a very odd utterance on Obama’s part. There is an element of CYA, an element of maintaining a crisis pitched atmosphere and an element of bizarre off the cuff carelessness–it is irrational to tell people that his judgment was wrong and yet they should spend their money. Everything is at cross purposes.
It speaks of a detachment from reality, but one that is not wholly detached.
Too me, of course, it betrays complete ingnorance not only of leadership, but what the very concept of leadership is. It is as though he thinks that a large portion of the electorate are campaign workers.
It is at least a blunder a day out of this admnistration.
It’s statements like this that keep me from tumbling headlong into paranoid, Manchurian Candidate-style, conspiracy theory about how this massive wealth-destruction is some grand, evil, scheme–maybe Occam is correct and it simply boils down to raw, base, incompetence?
Buddy,
Is what you said the same as saying there is not incompetence here? Because that’s pretty hard to believe.
ECM: Well it can be both you know.
I think it is clear though that he is a figurehead, a frontman. That does not mean that he does not have input.
If we don’t know, then let’s identify the information we need to gather to answer the question and how long we must look at the data before reaching a reasonable conclusion. Otherwise we are lost.
If you find yourself driving in a snowstorm on ice-covered roads, what does a sane person do?
SLOW DOWN! You know feedback will be limited and coruse corrections difficult. Slamming down the gas to “get out of the storm quick” is a really stupid thing to do. But I think Obama, like any leftist, is more interested in driving than in getting somewhere. It’s all about power. As long as he’s the one at the wheel, everything is okay, even if the car is tumbling down a cliff. That’s the constant with these people. It doesn’t matter how good things are, if someone else is in charge, it’s a disaster. It doesn’t matter how horrible things are, if their side is in charge, it’s a paradise. c.f. Cuba, liberal adulation thereof.
This is a very odd utterance on Obama’s part. There is an element of CYA, an element of maintaining a crisis pitched atmosphere and an element of bizarre off the cuff carelessness–it is irrational to tell people that his judgment was wrong and yet they should spend their money. Everything is at cross purposes
Perhaps he’s just laying down a marker for later as a means to justify confiscating savings. Horders and wreckers…
The fact that they seem to be in over their heads is, sad to say, an apparent answer to my daily prayers.
Looks like the only hope is for events to so outstrip their capacities that they are unable to manage them to their own ends.
Another follow-up to the Drudge-sourced NYT story I quoted abvoe (giving another rather dizzying look inside Barack’s brain):
Sitting at the head of a conference table with his suit coat off, Mr. Obama exhibited confidence six weeks into his presidency despite the economic turmoil around the globe and the deteriorating situations in Afghanistan and Pakistan. He struck a reassuring tone, saying Americans should not be frightened of the future, and he said he had no trouble sleeping at night.
“Look, I wish I had the luxury of just dealing with a modest recession or just dealing with health care or just dealing with energy or just dealing with Iraq or just dealing with Afghanistan,” Mr. Obama said. “I don’t have that luxury, and I don’t think the American people do, either.”
So, apparently, instead of focusing with laser-like precision on the one thing everybody (in the world) cares about, he’s decided that putting solar panels on your house is every bit as important as keeping us from plunging into another depression.
Source (NYT): http://tinyurl.com/b2ymuw
I wss just listening to C-Soan on the radio (Not much else on Saturday afternoon) while driving.
In response to a question by Senator Kyle about new taxes on offshore oil and gas producers may be bad for consumers and and steps towards energy independence, Geithner said that the country cannot continue to subsidize the oil and gas preoducers.
No longer tax increases but removal of subsidies.
I wonder if anyone realized how revealing this statement was. Communism or Socialism?
Imposing a tax is now removing a subsidy? Does this mean everything you own belongs to the government?
davod @ 34:
Not yet; but, possibly sooner than we can imagine.
Davod: I have heard this again and again from liberals I know. We have to increase the tax on oil because we are subsiding them. When I ask them how can this be, they point to higher taxes on gas in other countries. When I point out that this is a logical fallacy they get touchy, and when point out that it just gets passed to the consumer, they just walk away from me.
This lack of tax as subsidy is evidently some liberal meme that we have missed.
It is essentially this. Oils companies are bad, therefore good countries tax them to death. We do not, so ergo we are a bad country. Since we are a bad coutry, we do not have to justify new taxes and can lie about it.
That Geithner can say this with a straight face, says to me that the whole crew is out to wreck things. I former hih level FED exec that does not understand what this will due to us at this point in time just does not make sense. I do not buy it.
@6
Conservative teacher -
* you are in grand company
* no one has seen that bean in 25 years
* you’re not intended to see the bean, because you are not one of the assigned bean-trackers
* just eat what’s left of your rice – sans beans – with a dash of humility please.
E. NIgma@21
Or, Geitner could just be following orders?
Might explain some of the recent appointment refusals at Treasury; ie, understanding the plan, they refused to participate. Or, maybe more likely, they also had prior illicit dealings they didn’t want revealed.
Buddy@24
Ditto.
Mongoose@27
Actually, it’s easy to understand – “money stuffed in mattresses” cannot be electronically confiscated.
ECM@28
IIRC in the fictional Manchurian Candidate, the evil plot failed. Looks like we won’t be so fortunate in the reality play.
davod
All your dupes belong to us!
Mongoose:
Conservatives should emphasize what I said.
Nothing is new:
Make Mine Freedom: A new release from the Moving Picture Institute: A 1948 cartoon extolling the virtues of freedom and capitalism over statism. Somehow, the film seems eerily appropriate today. (Although it condemns “isms” of all stripes — such as fascism, socialism, and communism — clearly libertarianism is an label that was later formulated to describe the pro-freedom view of this film.)*
PS: Progressivism is missing as well.
Change you can believe in.
*http://volokh.com/ (Randy Barnett, March 6, 2009 at 1:22pm]
maineman/29; you’re right, i may have overshot there. but remember what every white collar criminal says when busted –I’m just a poor businessman, I had staffing trouble, my (pick one) staff, CPA, partner, shareholders, spouse, put me in this position. IOW, every variation of incompetence, anything that points away from intent. If the power circle here intended to crash the markets, the post-crash defense would be that yes, we shoulda coulda woulda this or that, but, jeez, we were tired, we’re only human, so sue me, so YOU should only try to be president. Data points to that effect are being laid daily. geithner’s staffing problems are WAY to overblown, no president has EVER explained a protocol gaffe (or even a Yalta) by releasing aa a news item a personal claim of exhaustion. Et cetera.
Geithner, alone and working night and day…
current Drudge headline.
Think about that awhile. World on the edge of some sort of abyss. One man holds the key. he is alone and working night and day.
How COULD you, America, do this to such a nice young man?
You should not be surprised that everything fell apart. In fact it’s YOUR fault. You failed to help this poor man working night and day with no help. So you got what you deserve.
Keating was an annoying stuck up twat, but he was a great treasurer and started Australia on it’s economic rise all those years ago.. but he was still a twat.
#25 – Buddy Larsen ~ You are so right ~
Indeed, it is not incompetence.
Why would G be going it alone? Because he’s unsure? Don’t think so.
Is this the groundwork for the overthrow of the U.S. Government?
Keating is a Labour member (Left Winger) so him blasting Boy Geithner means a lot.