Free Markets, Free People

Geithner makes unsubstantiated claim in an attempt to establish a meme

W

hat do you do if you’re a politician and you promised that if you did something good results would be assured. And then you did it and, in fact, things got worse?

Well that’s the situation the administration faces. It claimed that the "stimulus" was a bit like a FedEx package – something that absolutely, positively had to be done or we would be facing horrific unemployment – over 8%. So the Democratic Congress (alone) jammed through a pure pork package of almost a trillion dollars and sure enough unemployment which was below 8% at the time, eventually shot to 10% (and has now receded to 9.5% "officially").

Faced with that, what the administration has decided to do is run Tim Turbo Tax Geithner, the Secretary of Treasury, out there and pretend like the “stimulus” worked.  No, seriously, that’s their plan – damn the facts, go out and essentially say they’ve got the economy in good enough shape that they can now step back and let the private sectors take over:

Treasury Secretary Timothy Geithner said the economy has now recovered sufficiently for government to begin to make way for private business investment.

Mr. Geithner’s comments on Sunday, which echo previous sentiments expressed by President Barack Obama, reflect a turning point in the government response to the worst economic downturn since the Great Depression, a period marked by deep federal intervention in the financial, housing, auto and other industries.

“We need to make that transition now to a recovery led by private investment,” Mr. Geithner said Sunday on NBC’s “Meet the Press.”

Now that takes some stones.  To pretend that government intervention has done much of anything requires Hillary Clinton’s “willing suspension of disbelief”.  The GDP is limping along in the 1 to 2% growth area, debt has shot through the roof, unemployment remains stubbornly high (and higher than when government “stimulated” the economy) and legislation passed by this administration – and its legislative agenda – has businesses sitting on the sidelines with a pile of money and refusing to participate because of the unsettled business climate.

However, running this meme allows the administration to step back from its failure by calling it a success and passing the blame, now, to the private side.  This can have a two-fold effect for them if they can successfully run this bluff.  

For one, they can claim the private sector is to blame for continued weakness.  That’s very useful to them.  Why?   Because it sets up what they really want – a second stimulus and more government control. 

“There’s going to be a good case for the government preserving some type of guarantee to make sure people have the ability to borrow to finance a house even in a very damaging recession,” he said on “Meet the Press.”

He said the administration would begin developing such a program very soon. “We’re going to take a careful look at a set of reforms that are going to be good for the country going forward and don’t leave us vulnerable to this kind of crisis in the future,” Mr. Geithner said.

And it provides something this administration desperately wants and needs: a scapegoat.

Of course, with midterms coming soon, this may end up being an attempt that is too little and too late.  But frankly I don’t think it will take.  It is far too cynical an attempt to sell something that already smells terribly rotten.  Just as the majority saw through the attempt by Obama to claim that the “stimulus” didn’t have a gram of pork in it (as stated earlier, it was pure pork), they’ll see through this attempt to sell “the economy is better and it’s because of the “stimulus”” that Geithner is attempting here.

This, as usual, is more about political posturing and meme creation than it is about reality.  And with this administration, that’s something people have already come to recognize and dismiss.

~McQ

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30 Responses to Geithner makes unsubstantiated claim in an attempt to establish a meme

  • Europe’s prospects brighten as U.S. fades

    Dig beneath the headline and the contrast between the United States and Britain looks even sharper. Nearly all the growth in the British economy came from the private sector, led by construction and services. Friday’s U.S. GDP report is likely to show a hefty contribution from government spending and a slowdown in consumer spending.

    That “stimulus” will be our death.
    Meanwhile, even the World Socialists don’t believe Obama or Geithner.
    Geithner is history after the November elections.

  • For one, they can claim the private sector is to blame for continued weakness.  That’s very useful to them.  Why?   Because it sets up what they really want – a second stimulus and more government control.

    Is it just me or does this have shades of Allende’s Chile?  Make the economy tank, buy it up cheap, rinse, repeat.

  • No, “memes” are what you try to create when you try to establish lines like Obama has done nothing or can’t lead (though clearly his accomplishments of the last year, even if you disagree strongly with was done, shows adept leadership).  This is just economic good sense.  If you look at the trend lines on numerous economic statistics there has been marked improvement:
    http://www.fivethirtyeight.com/2010/07/regarding-double-dips.html
    The recovery looks about like the early eighties recovery at this point.    Stimulus was necessary to get it to this point, and luckily the stimulus funds had a lot of infrastructure and investment built in (I’d have prefered more long term investment and less direct stimulus, but politically that would have taken even longer and Obama is up for re-election in 2012).   The key now is to have private investment take over and show faith in the economy again, something I suspect will happen slowly at first and then grow.    It’s likely we’ll have good growth by mid-2011, with unemployment declining.
    At that point Obama, the Republicans and the Democrats have to do what wasn’t done in the eighties — once the economy is moving, start cutting spending, and potentially increasing taxes.   Here is the scariest news out there.
    Look at those stats about the disappearing middle class and the increased concentration of wealth at the top.  This is nearing third world like proportions, and has been a trend since 1980 (previously the middle class had been growing).   If that isn’t turned around we’ll get only a short stimulated recovery followed by severe stagnation and decline.

    • I think that we keep missing an important point– government promised that stimulus packages would forestall a recession or limit the damage of a recession.  None of the steps taken by government from 2007 to the present have done either, yet here they are preparing the ground for another stimulus and higher taxes.  If they actually made an effort to reduce spending and eliminate the deficit, I would be hopeful, but I there is no reason to believe that they will.  Especially when their plans seem to include successive trillion dollar deficits due to continued increases in spending, even allowing for additional taxation!

      • They under estimated the scope of the recession, but that doesn’t mean their efforts hadn’t worked.  Ronald Reagan had a similar problem in the early eighties (his approval went down to 38 in 1983).   They clearly do not think reducing spending now during the recession will be effective, they want to do it once the economy starts really growing (which we didn’t do in the eighties).  If there isn’t an effort to do so soon — real efforts at developing a plan to cut the deficit by mid-2011 or so — then I’ll definitely join you in criticizing that.

    • “The key now is to have private investment take over and show faith in the economy again, something I suspect will happen slowly at first and then grow.   ”
       
      Yeah, when plan A died a flaming death, it was good to recognize they didn’t know jack shit, and at least understand that plan B (leave things the hell alone) might save their (and our) bacon.  I do have to give them credit for that.    Good you get it too, but then I’m convinced you are probably also mightily  impressed when the college shaman from the human studies course goes forth with his mojo sticks, bird feathers and other arcana at around 5:20 AM your time and uses his spirit powers to chant the sun up into the sky of a morning and then sing it down out of the sky at around 8:20 in the evening.

    • And not that it’s related directly to this post – but since you’re such a big cheerleader for the Messiah and his plans and are big on telling us how much he’s accomplished and how wonderful it is,  an interesting note on the Health Care system of Great Britain, you know, one of those forward thinking countries that we were behind because we didn’t have a nationalized health care system here in the states-
       
      Yeah – great.  Who would ever have predicted such a thing or that it would happen here?  Oh, that’s right, we did.  Oh, I know, ‘WE’LL GET IT RIGHT!”  heh heh, yeah, we’ll get it all right.

      • My gosh, Looker, don’t you realize that the British health care system is totally different than what was passed here, and Britain is moving closer to what the  US is planning with this move!   To say Britain changing somehow reflects poorly on what the US passed, the US would have to have passed something like Britain’s system.  Not even close.

        • Heh – even the guys who passed it don’t know what they passed, and you think you do.
           
          As you said, not even close.

          • Only someone utterly ignorant of the British system and what was passed here could possibly think the two are remotely alike.    Changes in the British system will make it closer to what we just passed (though still far more state involvement).    And if you don’t know what was passed, well, that explains why so severely misunderstood this issue.

        • R A T I O N I N G.
           
          Rationing.   Get used to it,  even if your grand dad’s A-card is long since dust and you have not a clue what I’m referring to.

        • Obamacare is what the Democrats could pass. It isn’t Obama’s plan, it is just what Harry Reid could push through in the Senate. It is most like the MA plan, and will fail in the same manner as Romneycare is failing.

          Obama would like full bore socialized medicine, but they knew they couldn’t pass that. They will attempt to “fix” Obamacare until it is like the failed NHS.

        • You would have to be blind, Scott, not to know Berwick is quite the fan or rationing and the British Health Care system.  I assume you also noted Reid is now claiming he will pass a single payer system.  So, no, the British system is the ultimate objective of this crowd.

    • “Here is the scariest news out there. Look at those stats about the disappearing middle class and the increased concentration of wealth at the top.  This is nearing third world like proportions, and has been a trend since 1980 (previously the middle class had been growing).”

      Shocking  – Erb pasted a link. Not so shocking – The actual data in the link disproves his claim that this has been going on since the 80’s (and therefore Reagan’s fault) .  Only two of the 22 points show any data over time that go back as far as the 80’s. The first one is the first graph, showing household assets at several different points in time.  In the time from 1983 to 2001 (the latest year in the table) the assets of the top 1% went up 210%. The next 9% went up by 469%. The assets of the middle 20 went up by 706%, the bottom 40 went up by 450%.
       To summarize for Erb (and any of his poor students that share his math skills):
       In the 80’s and 90’s  the bottom 40% grew their assets just as much as the top 10%, and the middle class did the best of any goup.

      The other long-term historical evidence is the amount of housing equity owned by individuals vs held by banks. Individuals kept a steady lead throughout the 80 and 90’s. Banks did not begin to catch up until after Democrats took control of Congress, and did not take the lead until 2008.
      None of the other “22 statistics” meant to show the elimination of the middle class mention the 80s, much less have multiple data points over time, they just compare aone of a diverse, changing set of dates to the present. In fact, the starting point used most often (ie the good times) is 2008. What’s happened since 2008?

      Some day he may move past the headline and actually read something.

      • *yawn*   Good job totally evading the import and meaning of these stats by quibbling about the time frame.   To choose one stat (the one that points out 83% of stocks are owned by the top 1%) to ignore all the rest is dishonest (I also thought focusing on stock ownership was strange — of course the wealthier would own stocks, I didn’t find that stat all that impressive either).  Look at the stats — be honest!
        Fixated on the date of the eighties?  OK, forget that, just look at what’s happening to the middle class.    I’ll find the bit elsewhere about when the gap started growing between the richest and poorest (the middle class had been doing better until the mid to late seventies, but that wasn’t in these stats).   You can’t deny that in the eighties, as a global economic boom started in reaction to a drop in oil prices, we then hyper-stimulated the economy with a dramatic increase in debt, which went from 30% of GDP in 1980 to 60% by 1990.  Moreover, we shifted to buying foreign products and let the manufacturing sector shrink, meaning we started consuming more via debt (public and private) while producing less.
        But no one can look at those stats and not see the problem of a declining middle class.    You’re effort to bob and weave to evade the data is pathetic.

        • You brought up the time frame, and you provided the statistics that show you were wrong. I looked at all the evidence provided and it shows that most of the damage to the middle class occured after Democrats took control of Congress. Be honest, you didn’t even follow the link you posted to the original source. Again. I suggest you take a middle school science class and see what happens when insist on a conclusion that is disproven by the evidence from your experiment. 

          • *yawn* You doth protest too much. LOL {eyes rolling} See, I hate it when I have to explain multiple truths to you guys again and again. See, my data proves EXACTLY what I need it to prove an any particular time. That’s because I have godlike powers of political science, and have advanced degrees, while you are just a nameless guy on the Internet. This “evidence” you speak of does nothing to alter these conclusions of the holy writ of post-modernism.

            Besides, your insults about middle school science are misplaced. I passed Basic Statistics for Social Science Majors. And, with my godlike powers, I have extended that content using the holy writ of post-modernism to account for multiple truths that can be proven statistically. You should sign up for my online course, which contains a section on postmodern math and statistics.

            The only request I would make if you do sign up is please, please don’t choose a magenta caterpillar with Sarah Palin’s face for your avatar.

          • Now you’re off the deep end talking about control of Congress.   You want to blame one party, but it’s clear that Reagan embraced these policies and accepted the growing deficit, long before the Democrats controlled Congress (in fact, early on with southern Democrats supporting him, Reagan had support from both houses).  Now, I am not so simple minded that I’d blame only one party.   The Democrats and Republicans worked together to make this mess.   One one side points the finger at the other said and says “they did it” I have to roll my eyes at such childishness.
            And, in your desire to bob and weave, you still aren’t addressing the issue of the disappearing middle class and what that means.   Have you no substance?

          • “have you no substance”  – thank you, you made me laugh.  Talk about irony challenged.

    • The recovery looks about like the early eighties recovery at this point.

      Wrong history, wrong causation.
      Typical.

    • Scott, I find the analysis by Stewart at 538 to be quite unimpressive.  First, he manages to ignore serious downturns in ISM services and manufacturing.   Second, because he does not use a baseline of zero, we have to look pretty closely at his charts to see what he is telling us.  In particular, the graph of GDP looks nice until you take the actual numbers and a calculator and see the GDP increase is 2.7% over 18 months.  PCE is similar.  After putting a calculator to it, PCE is up about 2.2 over those 18 months.  So, in essence, we have spent about 10% of GDP in a debt based stimulus to get somewhere around a 2.5% increase in economic activity.  That is hardly what anyone in his right mind would call a “success”.    Rohmer would tell you, if she were not part of the administration that tax cuts are a far more effective stimulus than deficit spending.   BTW, there is a word to describe Rohmer since she changed all her opinions to be a part of the administration.
       
      More importantly, a significant amount of that economic activity was inventory replenishment that would have happened anyway.  The impact of the “not so much” stimulus is ending as we speak, so what do you and Stewart think will be the driver of increased activity?  Geithner hopes it will be private investment, but few people see that happening.  Business is not spending and the conventional wisdom us there is just too much uncertainty.  Nothing this administration is doing is going to dispel that.   Last week, Reid says cap and trade is dead and this week he want to pas an energy bill in a week and a half.  Fortunately, with no budget, he can’t force anything  through in reconciliation.
       
      Now, we have not even factored in the idiocy of letting the Bush tax cuts expire.  Anyone who thinks these were tax cuts for the rich either does not do his own taxes, is a lying idiot, or does not pay taxes.  There will be some very surprised people when they look at their withholding for January.
       
      In addition, bond rates are telling you the bond market does not expect an expansion any time soon.  The stock market is moving around on very thin volume.   In spite of Stewart’s nice charts and your “fawning” approval, there is still fear in the land and nothing will happen until that fear is dispelled.  I suspect we may get a better view after the 2010 elections, but I would not bet the farm on that either.

  • “We need to make that transition now to a recovery led by private investment,” Mr. Geithner said Sunday on NBC’s “Meet the Press.”

    A couple of possibilities:

    1.  The regime – or their deep-pocket donors – have realized that Obamanomics has been an unmitigated disaster, both economically and politically.  However, they can’t admit admit this publicly, nor can they admit the corollary that government deficit spending does NOT stimulate the economy.  So, they’re trying Plan B – capitalism / free(er) markets – and trying to make it look like it’s just part of Plan A: “We meant to do this all along.” I note that the reds have done this at various times when economic reality utterly swamped Marxist-Leninist theory;

    2.  Tax Cheat Timmy is speaking for himself and his words will be repudiated by the White House;

    3.  It’s all smoke and mirrors to confuse the issue, much like the “hard pivot on jobs” earlier this year: the regime will claim to be doing one thing while actually doing something else, confident that MiniTru will report what The Dear Golfer wants the proles to believe (first assignment for Cabalist!).  Claiming that they are going to “take a careful look at a set of reforms that are going to be good for the country going forward and don’t leave us vulnerable to this kind of crisis in the future” while hinting at a free market recovery could be a smokescreen for another push at cap ‘n’ tax, tax increases of some sort, or even more “regulatory reforms”.

    As an aside, I’m still trying to figure out why Tax Cheat Timmy is taken seriously on economic matters… and not in prison.

  • If the Inspector General comes up with the wrong answer, he’ll join the officially 9.5 percent unemployed.    

  • “There’s going to be a good case for the government preserving some type of guarantee to make sure people have the ability to borrow to finance a house even in a very damaging recession,” he said on “Meet the Press.”

    IIRC people bought houses in the late 70s, early 80s when mortgage rates were in the mid-teens during a “very damaging recession”. And you would have had to search very hard to find anyone to fund a mortgage with less than 20% down. Mortgage financing is not a federal responsibility.

  • Oh, sure…  The Porkulus worked so well, that…uh…

    The Treasury secretary yesterday said government had done enough on jobs. Sir Harry Evans, one of 100-plus leaders who signed a manifesto urging more action, on Geithner’s Hoover impersonation.

    http://www.thedailybeast.com/blogs-and-stories/2010-07-26/harry-evans-geithner-sounds-like-hoover/?om_rid=MR$hOk&om_mid=_BMTX-XB8PxUPtu&
    See, we have the Collective using the “both ends against the middle” (meaning the people) approach.