Three simple steps to solve the “crisis”: one for the US; one for Europe; and one for China (h/t Drudge). Here’s the US Secretary of the Treasury, writing in the Financial Times:
The three most important things that have to happen for the world economy to regain momentum are these. First, the US should act to strengthen growth and employment. President Barack Obama will push for the very substantial package of public investments, tax incentives, and targeted jobs measures he put forward on Thursday night, combined with a carefully balanced mix of fiscal reforms designed to restore fiscal sustainability over the medium term.
Second, Europe needs to take more forceful action to generate confidence that it can and will resolve its crisis. This requires governments working together and alongside the European Central Bank in an unequivocal commitment to support Europe’s financial system and ensure governments can borrow at sustainable interest rates as they reform. Finally, China and other emerging economies need to continue to strengthen domestic demand and allow their exchange rates to adjust to market forces.
A lot of buzzwords there. “Reform”, “sustainable”, “growth”, “world economy”, blah blah.
There’s a kernel of an idea in there somewhere. The US keeps spending and spreads it around a little better with “public investments”. You know, like the WPA from FDR’s era. Then European countries refrain from forcing each other to the brink, holding it together just a little bit. Then China takes some of the slack out by letting their peons make some money so they can buy from us for a change if we ever get around to producing anything they want.
In other words, a couple of minor adjustments and then more of the same. It’s always worked before so why not now?
Elsewhere Geithner seems to understand that things are just a little different this time. “This was a terrible crisis”, he says.
Who is his audience? Other government finance ministers, central bankers, opinion makers. Other members of the “elite”. Fair enough. It would seem he is quite unable to talk to the rubes in flyover country – theirs or ours.
I keep coming back to Dickens when this subject presents itself. I don’t read Tim Geithner’s essay and perceive an evil man, but I’m astonished at the unselfconsciously narrow and self-serving (from the standpoint of social class) perspective. He is so far removed from an understanding of what it really takes, what it really means, to “produce wealth”, which after all is the only true method of achieving “economic growth”, that he thinks he and his ilk from across the globe can simply agree on some “policies” and all will be well. It does not seem to occur to him that we have already moved well beyond the point where a little managerial tinkering can address foundational flaws that have prompted civil unrest in many places, including even the UK. It also doesn’t seem to occur to him that he doesn’t really have so much clout, offering opinions from his Washington DC office, that whole continents and billion-plus population nations are just sitting there, waiting for some word from him before they know what to do.
History tells this story over and over, and it’s depressing. The rabble rise up and people like Tim Geithner lose their heads, figuratively or literally. Then the inmates are running the asylum and at that point things get really ugly. We are on the road to a repeat performance of this play, and no one seems to know how to get off.
Apparently it’s not so easy as just turning the wheel. The power steering pump has seized up and someone has to reach under the hood and cut the drive belt. Otherwise we’re just locked in until the bitter end.
Gotta love those motor head metaphors. And obviously, Geithner and his audience are not mechanically inclined.