The Blind Arrogance Of Man

A Dec 22, 2009 National Public Radio interview with Treasury Secretary Timothy Geithner 
Follow the link and see the entire interview yourself.
My comments are in italics.

NORRIS: I'd like to begin by getting you to explain something that you actually said. I'm just going to look down for a minute because I want to make sure that I get it correct. You said that this is a year that began with America facing the risk of a second Great Depression, but is ending with America on the road to recovery. The road to recovery. Now, for a lot of people that recovery still feels like it's somewhere off in the distance. Why should people on Main Street feel as confident as you are?

Sec. GEITHNER: The economy is growing again. The policies the president put in place are helping lay the foundation for growth and job creation. And everything we're focused on doing is try to bring forward the time where the economy is creating jobs again. People are going back to work. People can be more confident about their financial future, their financial security. And I think Americans can be more confident in that. If you look carefully at what you see about consumer confidence surveys, surveys of business confidence, if you see how people are behaving again now, you see confidence starting to come back.

PW: Which people are those Tim, and do they have full time work?

NORRIS: You know that businesses are spending again. The administration has been asking the banks to try to free up more money for small business in particular. And I want you to help me understand something because on one hand the administration is telling the bankers that they need to take fewer risks, that they need to deleverage, that they need to have higher capital reserve. And at the same time you're also telling them that they need to lend more money. Those two things don't seem to square.

Sec. GEITHNER: It is very important that we work with Congress to pass legislation that can put in place financial reforms that can prevent the next crisis. So it's pretty important in the future we build a more stable financial system. We constrain risk taking in the future. But right now the real risk we face is that banks are not lending enough and not going to provide the capital businesses need to grow for the economy to strengthen going forward.

PW: So far no real reforms have been put in place.  There is no mark to market accounting, no separation of hedge funds from commercial banking, nothing.  This is on reason why Paul Volcker and Simon Johnson of MIT are concerned as we noted in a previous post.  See Volcker Gets Mad.

Sec. GEITHNER: A basic lesson of financial crisis is you need to make sure that you are doing what is necessary to repair what was broke in the system. And if you pull back support prematurely, then the risk is you're going to hurt growth, unemployment will go higher. A lot of countries made that mistake in the past, we're not going to make that mistake. So we're going to do what's necessary to achieve that.

PW: So you are saying the more money printing and monetization of the Federal Debt will occur. Its good to know that we can borrow our way of of this hole!  This did not work in the 1930s but apparently "this time is different".

NORRIS: You know, pardon me for presenting you with all these doomsday scenarios, but as you know, many people are worried about a second wave of systemic crisis, that either because of commercial real estate or the value of the dollar...

Sec. GEITHNER We're not going to have, Michele, a second wave of financial crisis.

PW: There is an important distinction between confidence and cockiness. I call bullshit on this one Tim because this administration has done nothing so far to prevent a second crisis.

NORRIS: You're that confident? You're certain of it.

Sec. GEITHNER: We'll do what is necessary to prevent that. We cannot afford to let the country live again with a risk that we're going to have another series of events like we had last year. That's not something that is acceptable. And we will prevent that. We will do what is necessary to prevent that, and that is completely within our capacity to prevent.

NORRIS: You're saying you're confident that it won't happen. What levers can you press or pull to make sure that does not happen again?

Sec. GEITHNER: As people saw, when you have the will to act, we have substantial ability to prevent that, and we'll do what's necessary.


With Tiny Tim and Helicopter Ben on duty the public has nothing to fear! After all they are the people who had the foresight to see the crisis before it arrived.

Oh, wait, that was someone else. 
So, good people of the United States of America, have no fear, Tim Geithner is always on duty!
Eventually all the money printing will kick inflation into gear, but only after a massive reduction of credit and the associated deflation.  At some point, given the current trajectory this administration is on, we will be looking at a sovereign default and US dollar collapse.  My estimate is late 2010 to early 2011.  This has all sort of ramifications from the market to everyday life as shown by the flowchart here:  Possible Chain Of Events 


  1. I don't think that Tim Geithner was ever employed in any capacity at Goldman Sachs.

  2. Anonymous you are quite correct. Hank Paulson was an ex-Goldman staffer. Geithner did appoint former Goldman lobbyist Mark Patterson to be his chief of staff, but Tim was never a Goldman employee. I have corrected the article accordingly.


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