Today’s must read MSM piece is a NYT OpEd by Treasury Secretary Tim Geithner, Welcome to the Recovery. I have been critical of Geithner’s reign at Treasury, and even more so of his former role as President of the NY Fed.
But today’s commentary is fascinating: What he writes is, for the most part, true. However, it does not quite paint a fully accurate picture. It tells only half of the story of the recovery, while ignoring the long term costs:
• Exports are booming because American companies are very competitive and lead the world in many high-tech industries.
• Private job growth has returned — not as fast as we would like, but at an earlier stage of this recovery than in the last two recoveries. Manufacturing has generated 136,000 new jobs in the past six months.
• Businesses have repaired their balance sheets and are now in a strong financial position to reinvest and grow.
• American families are saving more, paying down their debt and borrowing more responsibly. This has been a necessary adjustment because the borrow-and-spend path we were on wasn’t sustainable.
• The auto industry is coming back, and the Big Three — Chrysler, Ford and General Motors — are now leaner, generating profits despite lower annual sales.
• Major banks, forced by the stress tests to raise capital and open their books, are stronger and more competitive. Now, as businesses expand again, our banks are better positioned to finance growth.
• The government’s investment in banks has already earned more than $20 billion in profits for taxpayers, and the TARP program will be out of business earlier than expected — and costing nearly a quarter of a trillion dollars less than projected last year.
If you have ever wondered why some people progress within organizations, this is a perfect example. Say what you will about the Treasury Secretary’s understanding of the crisis or his policies at the NY Fed or at Treasury, he knows how to make his boss happy. I doubt there is anyone at the White House unhappy with him today.
I will go into greater detail in the future, but I just had to point out this little tidbit:
According to a report released last week by Alan Blinder and Mark Zandi, advisers to President Bill Clinton and Senator John McCain, respectively, the combined actions since the fall of 2007 of the Federal Reserve, the White House and Congress helped save 8.5 million jobs and increased gross domestic product by 6.5 percent relative to what would have happened had we done nothing. The study showed that government action delivered a powerful bang for the buck, and that the bank rescue on its own will turn a profit for taxpayers.
That is now our standard — what was done versus doing nothing? That is truly the wrong counter-factual (more on this tomorrow).
The bottom line: Timmy’s job is safe for the foreseeable future.
Welcome to the Recovery
TIMOTHY F. GEITHNER
NYT, August 2, 2010