This page has been archived and commenting is disabled.
Tim's Gotta Go
The following are portions of Treasury Secretary Tim Geithner’s final
communiqué to the G20 and my comments. The full communiqué can be found Here.
Last year, the G-20 acted
to restore growth to a world in crisis. The IMF expects global growth to
exceed 4 percent in 2010 and 2011.
to restore growth to a world in crisis. The IMF expects global growth to
exceed 4 percent in 2010 and 2011.
Tim, that is not what the IMF said. From Reuters:
"An IMF report presented at the G20 meeting earlier
estimates that coherent adoption of the adjustment policies could
increase global growth by as much as 2.5 percent annually over a
medium-term five year period."
The head of the IMF
Strauss-Kahn had this to say on growth prospects:
"I am totally comfortable" with a final communique calling
for troubled euro zone countries to accelerate fiscal consolidation.
They have to consolidate strongly even if it has some bad effect on
growth."
So Tim, the IMF does not share your rosy views on
global growth. In fact they are worried that the necessary fiscal
consolidation will result in slower growth. Geithner’s statement was
read by every finance minister at the meeting and around the world. They
will read Tim’s words and just conclude that he is selling a story to
the newspapers and has no substance to offer. So much for financial
statesmanship.
The US is in its 4th
quarter of solid growth.
quarter of solid growth.
Solid growth Tim? This is just a lie and he and the other heads of state
know it. The recovery to-date has been tepid by any comparison to any
recent US post recession cycle. We have unemployment at 9.7%, a 50 year
high and we can’t create 50,000 jobs a month without massive fiscal and
monetary stimulus. We are growing because of a very big inventory cycle
and the continued stimulus measures. Were it not for those factors we
would be looking at negative real organic growth. Tim is selling a bag
of crap to an audience who knows better.
European authorities gave
us an update on their reforms and financial programs. Our discussions
were focused on our two core priorities: growth and financial reform.
us an update on their reforms and financial programs. Our discussions
were focused on our two core priorities: growth and financial reform.
On growth, we reaffirmed
our strong interest in making sure we reinforce the ongoing recovery in
private demand across the G-20. As we do so, we agreed on the need to
undertake and credible commitments to restore fiscal sustainability over the medium term.
our strong interest in making sure we reinforce the ongoing recovery in
private demand across the G-20. As we do so, we agreed on the need to
undertake and credible commitments to restore fiscal sustainability over the medium term.
This stupid sentence did not go unnoticed. The focus was on the words, “medium
term”. In this case what Tim was really saying:
“We all know what we are doing is not sustainable and it may
kill us if we continue, but we have to keep kicking the can down the
road for at least two more years. That way my boss has at least a chance
of being re-elected and I might keep my nice job”.
Tim
wants the world to do what he is doing at home. Deficits in excess of
10% of GDP. Debt levels that are approaching annual GDP. Debt levels
that far exceed GDP when the D.C. mortgage debts are included. He wants
ZIRP to last forever, even though he knows it is killing savers. He
wants an unending stimulus program for housing, cars, agriculture and
every other segment of the economy. And he wants to do this when our
country is in a protracted and expensive war. There is no leadership.
In the United States,
we’re moving forward with important reforms of health care, education,
and our financial system—together with substantial investments in
innovation, basic science and research and development, and
infrastructure. All these initiatives are designed to provide a stronger
foundation for future economic growth.
we’re moving forward with important reforms of health care, education,
and our financial system—together with substantial investments in
innovation, basic science and research and development, and
infrastructure. All these initiatives are designed to provide a stronger
foundation for future economic growth.
More lies. The health care reform was a joke that was rushed through in
the dark of night. The assumptions used were bogus. The whole thing is
going to have to come back on the table in less than one-year it is so
badly flawed. About those investment in science and research, is that
why the administration gutted NASA?
What Tim and his cohorts did in the past 18 months is wrack up an
additional $2 trillion in debt to keep things going. They have not done
one thing that I can think of to, “provide a stronger foundation for
future economic growth”. There is a great deal of empirical evidence
that economies have a difficult time of sustaining any growth when debt
to GDP exceeds 100%. We are functionally there today. Tim has done
nothing to help us long term. If anything, his plans will mute growth
for decades.
Within the G-20, we
discussed how the ongoing shift toward higher saving in the United
States would need to be complemented by stronger domestic demand growth
in Japan and in the European surplus countries, and sustained growth in
private demand, together with a more flexible exchange rate policy, in
China.
discussed how the ongoing shift toward higher saving in the United
States would need to be complemented by stronger domestic demand growth
in Japan and in the European surplus countries, and sustained growth in
private demand, together with a more flexible exchange rate policy, in
China.
Tim is begging the rest of world to help him out. He wants Japan, China
and Germany to help him out? Those folks are not listening and Tim knows
it. He was just in China and the issue of exchange rates was not
addressed. There is little prospect for “flexibility” by China anytime
in the near future. He failed miserably on this issue. Japan has 200%
debt to GDP and Tim thinks they are going to be the source of global
growth? This country has 1/3 our population and 1/3 of our GDP. They
will not assume the role that the Treasury Secretary wants.
For me, the most significant response to Timmy’s plea for more deficit
spending came from the head of the ECB, J.C. Trichet:
“The impact of narrower budget gaps on growth could not be
considered negative because it would improve confidence. The need for
such action is clear in old industrialized economies.”
Trichet
has said he will not play in Tim’s sandbox. I love that he stresses the
point that confidence is now a central issue in global economies. He is
admitting that without sane policies confidence will be lost and when
confidence is lost the mother of all depressions will follow.
When Trichet says, “old industrial economies” he is talking about
the USA. These folks choose their words carefully. They are diplomatic.
When Trichet said this it was equivalent to a punch in the nose in the
real world. While Tim shed no blood, this comment hurt. It was a strong
rebuke. Damn near an insult. Do not look for the ECB to bailout the US
or Europe for that matter. Consider also the comment from the head of
the German Central Bank, Wolfgang Schaeuble:
"I made no bones about the fact that I share the IMF's
underlying philosophy only in a very limited way,"
The ECB
and the Bundesbank have spoken as one. They both have said “no” to Tim.
This exchange should not be ignored. It has significant implications as
to how far the Germans are prepared to go in support of the EU. My read
on this is that the answer to the question, “How far should we go?” is
“Not far at all”.
Fiscal consolidation
should be “growth friendly”—as the IMF puts it—with the pace and
composition of adjustment varying across countries.
should be “growth friendly”—as the IMF puts it—with the pace and
composition of adjustment varying across countries.
“Growth friendly” = big deficits = Death. Tim relies on words
from the IMF. He is using this as a way to defend what he wants. He is
hiding behind the skirts of the IMF technocrats? A very weak place to
hide.
The United States is
moving aggressively to fix things we got wrong and to strengthen our
economic fundamentals.
moving aggressively to fix things we got wrong and to strengthen our
economic fundamentals.
Moving aggressively? What is he talking about? Fin Reg? That is also a
joke. Timmy G has gone out of way to avoid addressing the problem the
country faces with the mortgage agencies. These beasts now represent an
off balance sheet of commitment in excess of $7 trillion. They continue
to write 97% LTV loans and suffer double digit defaults. They are 90% of
the current mortgage market. The GSEs represent a far greater systemic
risk than any other component of our economy. Yet the Treasury Secretary
thinks these problems are too difficult to confront. The result will be
over $400b in losses born by the public.
Tim is going to get hit in the face with a two by four on December 1st
when the Fiscal Commission comes public with its recommendations on how
the US can return to fiscal prudence. On that day everything that Tim
has been calling for will be trashed. The Fiscal Commission was made
necessary to some extent because the Treasury Secretary was too weak to
lead a proper response. But the job of selling and implementing the
spending cuts and tax increases that will be recommended will fall to
the Treasury Secretary. There is not one chance in a hundred that he
will succeed in that role. He is wedded to big debt and big government
spending. He is the wrong guy to lead us in the right direction. If we
are going to make it to 2015 without a major financial collapse we need
some leadership.
Time's up Tim. You gotta go.
»
- advertisements -
The real issue is that Tim Geithner was one of the biggest contributors to the whole financial meltdown and now we have him in a position to make it right? When he was head of the NY Fed he was the King Crony answering to the likes of Jamie Dimon and Lloyd Blankfein. In fact in the few months after the crisis began he spent most of his time on the phone with them and not the White House. He and his buddy Hank allowed for the collapse of Lehman so that Goldman could become the sole pimp and have control of all the whores. Not to mention that he made sure that AIG would pay out their 185 billion in CDS obligation to all the banks at 100 cents on the dollar with taxpayer money. This bunch of cronies are nothing but the white collar mob, pretending to save America from disaster, meanwhile pulling off the biggest heist in America's history. This was their intention, they wanted to pull 5 trillion out of taxpayer's pockets and distribute it to the banks which have held this country hostage. Then they pulled another 5 Trillion out when the markets tanked robbing peoples 401ks and their savings, pretending the whole crisis was caused by some subprime borrowers. If this wasn't the case then why were they fueling the MBS and CDO markets, meanwhile backing all their bets up with insurance from AIG. Seems to me this is criminal, they robbed us on both ends when they collapsed the markets. Now we have the same group of Cronies trying to bring us out of the crisis? I think not, I think they are looking for dessert and want the next round of freshly printed cash. Ben Bernanke is the pastry chef and Timmay is the little waiter is dishing it out. Pretty sad to sit here and watch the middle class in America under seige and nothing is being done to prevent it. The problem they now face is that other countries aren't buying into their ponzi scheme any longer and if they are they are only doing to hold more cards in the game against America. The foreign debt holders have the upper hand on us now as they could cash in their chips at any time and call us to the rug. Meanwhile we just continue to print away and pretend that this one trick pony might actually get another act.
Geithner cannot be more of an embarassment than George Bush was, can he?
Hey Blurt, Bush bashing, was, so, 'yesterday'. I mean come on, with all this new good material given to us by the new administration and you're still back on Bush? I suppose you're still listening to 70's rock n roll too.
Disclosure: I don't like either party!
Tiny Tim is talkin' the talk and walkin' the walk.
The problem is that he is a Ninja borrower. The walk he is talkin is that of a defaulter. He is going to slip out at nightfall.
Geithner = Epic Fail
It was designed that way
"Intend obsolescence
Built into the system"
So what if Tim goes? It's not like Obama is going to see the light and quit his big government ways or cease to consider mortgage debt as a civil right or cut taxes and regulations that would spur private enterprise.
I don't think anyone from the Austrian School will be on the short list for the next Treasury secretary. If we have another massive financial wipe-out Obama will just assume destiny has chosen him to be the second coming of Abe whatever-it-takes Lincoln (his fav pres) and he'll start nationalizing the crap out of everything.
"he'll start nationalizing the crap out of everything."
uh, I think he's already doing that -banks, auto, auto financing, student loans, health care, energy (well, shortly)....
Who would Soro's, oops, I mean Hopey pck to succeed Turbo?
+100x u nailed it
What has to go is the man who appointed him.
Lies, damn lies, and lawer/govment lies.
REPLY TO---------Rebel
on Sun, 06/06/2010 - 18:09
#398450
"I wonder how the elderly are coping. Lets say a working type couple worked hard and saved their entire lives, and saved $500,000. This would be a great feat. They retired, planning on traveling and enjoying their senior years. They had been advised that it would be safe to pull 5% per year from the $500,000. This would be $25K, plus social security. They would be comfortable. But, now with the market being unsafe, they are forced into CD's paying 1.5%, or $7,500 per year. I wonder how retired or recently retired folks are coping with this.''------------------------------------------------------------------------------
Most seniors have put away the idea of seeing the World. The housing downturn and the market downturn trimmed the asset base quite well. Many of us oldsters are budget tight and focused upon the job market impacting our children. For those with children that are unemployed, the retirement budget for two becomes a living budget for needy children and the retired couple. For those parents who have been involved in the education and higher education of their children, the lack of jobs for the kids that worked hard to get a degree and now have 7 or 8 “wasted years” the realities of today create a very angry reaction. I do not hear a lot of complaints from my oldster friends about not having a new car or a vacation. I do hear very bitter reactions relating to what is happening to their children.
Nice one Bruce. Now do Leo K.
Re: Leo K. Don't agree with him. Like to argue with him. Love him none the less.
if after watching the confirmation hearings and timmy's career you did not expect a communique like this, then i would submit that you are a fucktard....
nice analysis...God i'd love to be a fly on the wall when these guys talk in private....when the elite fight, we get to see a little behind the curtain tho.
On the Timmy nice job thing, I wonder where the pay off is for him...most guys go to treasury to cash out tax free, but he's never made GSacs money.
Gotta go....to jail.
Has someone said that yet? Probably.
Bruce: Thank you for posting this... just fabulous. Timmay is the Baghdad Bob of the Obammy administration. What a clueless tool.
Nice summisation of the geopolitiics plaguing the global financial community Bruce.
It really is economic war.
It's all party line from a party hack.
Bruce - I echo the comment above. Your articles and thoughts are dead on accurate and your analysis unerring. Thank you for your work.
I'll fix it, I'll fix it, geesh....
"Were it not for those factors we would be looking at negative real organic growth."
You are looking at negative real growth. GDP is up, but it's a gamed statistic. The government has created activity, but not wealth. In fact, they've destroyed wealth.
Consider also the comment from the head of the German Central Bank, Wolfgang Schaeuble:
The quote is correct and from Schaeuble. But as you say he is Fin Min not Buba. Not sure if this is just my fuck up or the news service it came from. Either way thanks for the correction. Who says the blogs are not self policing on facts?
tks D.
bk
Bruce, I always look forward to your articles. I swear you are one of the best if not the best on the internet. I hope this article circulates among all those G20 finance ministers. I'm sure it will. Maybe you've driven the stake through Timmy's heart.
tks claws. made my day.
bk
+1 ... I'm with Escapeclaws.
Great analysis and synthesis. Love reading your work.
This is another example of why a person would have to be crazy reading the "old media" for this kind of content -- those "reporters" would have no idea how to start a piece like this, much less be able to understand what you're saying.
Great work. Great insight.
+1!
The guy that has to go is Tim's boss but our two party system is so broken the alternative choice will almost certainly be some dynamic duo of untenible nutters. It's just a very bad situation and as near as I can tell it goes on until we have a failed bond auction. And in that sense the European elites are bailing us out. Buying lots of our worthless debt.
I don't know if the guy has any interest in national office but Gary Johnson, the republican former governor of New Mexico impressed me. The guy was vehemently for his state being fiscally honest and also supported legalization of drugs. I think he also supported Ron Paul instead of the other repubs in 2008.
I'm confused on why everyone is focusing on the actor instead of who writes the scripts.
Bingo Gully !
Ding ! Ding ! Ding !
Bruce has it entirely right, as 'Mish' Shedlock calling for the
indiction of Tiny Time for securities's fraud in
relation to the AIG/ GS bail-out
Little notice was given to the fact that Tiny Tim
was flanked by Sheila Bair when he visited China,
or rather was summoned there,and I doubt
Sheila Bair was vacationing there...
Then Tiny Tim went to Europe to meet with
the new Chancellor, Schauble and Trichet ( though
not a line came out of that meeting ) and started
lecturing Europe about the need for banks's stress
tests, while having previously written to the European
commissioner to 'lobby'on behalf of hedge-funds, as
noted by Yves Smith
Saturday the German financial press was full of headlines
Geithner: forget about U.S demand. At this
point you could replace him with Mc Chrystal,
the two are so ineffective one would barely notice.
The only problem I can see is: who could replace him
and quickly ?
With this many unemployed there has to be someone. Just grab someone from the local workforce center.
Bring Madoff out..not much between them. Both taking / took everyone to the cleaners.
Timmay was of course referring to the squids new piece on the next 100 to be BRICs (Bangladesh,Rwanda,Iran, Congo...) that are going to push growth close to infinity in infinity and pay off all western debt. Run Timmay, run.
Keep him. The U. S. needs to hit bottom sooner rather than later. At least he's the devil we know. Anyone actually smarter than he is might just drag this out even longer. Let's get this show on the road.
I don't know about keeping Geithner, but I do agree w/ you Rocky that the sooner we get this done (bringin' it down) the better. Pretend & extend just means more pain over all.
"It's the spending, stupid!"
If .gov ever understands this, OK we may have a big bad shock, but we will be better sooner.
At the risk of being junked, maybe we ought to just let Israel get it all started for us. Take the pain now, clear the field...
Maybe we can find someone more stupid than Geithner to do the job. Surely there are zillions of technocrats who would take the job! There should be plenty of brown-nosers in inventory to choose from. I thought I'd be out in the cold on my opinion, but getting your rousing endorsement lets me think I'm not such a clod.
While we're at it, could we get another Great Depression "expert" to do Ben's job as well? That would go a long way in crashing the Fed!
Lordie, t'was a thinkin' the same thing this very mornin'.
Bravo on an excellent analysis! I think there is even more to the rebuke of Tim by the G-20 than meets the eye. It is no coincidence that Timmay the Small is coming home with his tail between his legs and that the Fed is having a closed door meeting tomorrow under "expedited procedures". Things are beginning to move and shake and although we all believe that the markets are fixed, it will be interesting to see how the Nikkei and the euro trade tonight at the opening. Methinks we're in trouble.
on Sun, 06/06/2010 - 13:25
#398214
It is no coincidence that Timmay the Small is coming home with his tail between his legs and that the Fed is having a closed door meeting tomorrow under "expedited procedures".
.....an errand boy, sent by grocery clerks, to collect a bill.
the horror...
Beautifully said. Thank you.
Like all puppets (POTUS, etc.) Timmah does not say a word that departs from the script.
This is a clearly defined fact, is it not? Please let me know why articles by very sophisticated writers continue to be written in some alternate universe that does not make use of our knowledge of the puppet nature of high officials.
Can anyone say: Col. House, Kissinger, Brezinski, Bush, Cheney, and a loooong list of other direct handlers.
Does it make more sense to live in the sophisticated universe where we remove the:
"Oh Timmah said 'This' and it contradicts previous fact therefore Timmah is a fool."
No. Timmah is obscuring reality for folks too tired to dig for it. Which is what percentage? So he is fulfilling his purpose. So he stays. As long as he is on cue and needed.
I don't think that Geithner can be pushed out so easily because of his ties to the New York FED & therefore Uncle Benny. They have too many people to throw under the bus that don't have such a connection to the Central Bank Dark Lords. Why would they groom someone like Tiny Tim just to blow him up?
Japan very soon to be the next country to face default crisis! I predict sometime this summer.
http://www.bloomberg.com/apps/news?pid=20601087&sid=azo8REkdtnv0&pos=7
agree with other commenter...they can monetize, and are less vunerable to currency manipulation by others...to truly default, I believe you first have to have traders turn on you.
@Tigers
Since they can print yen, and buy their own debt with it, why would they default?
To protect the purchasing power of the yen.
Most JGBs are owed to other japanese (e.g., via postal savings accounts), who would be wiped out by a default. Japan could default on certain bond issues, those held by foreigners, for example. Other countries have done this.
Another example is rolling haircuts, paying, say 80% of face at maturity, adjustable for each wave of maturing bonds. This is still a default, but the holder is not wiped out.
Default has advantages over high inflation:
It kinda stinks to not have the world's reserve currency Japan.
I know, the US risks losing that, too.