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By Tim Price, originally published on Next New Deal

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The Tim Geithner Era (Slate)

Matthew Yglesias looks back on the mixed record of Tim Geithner, the influential treasury secretary who seemingly only managed to convince one person that he had all the answers, but lucked out with that person being the president of the United States.

The Mortgage Mess and Jack Lew (Prospect)

Robert Kuttner argues that progressives should press hard on Jack Lew to find out whether he would have let the latest mortgage settlement happen on his watch—once they're finished rolling their eyes at the president's praise for his budget-balancing skills.

Treasury: We won't mint a platinum coin to sidestep the debt ceiling (WaPo)

Ezra Klein reports that life has killed the dream we dreamed, as the Treasury Department says it won't mint a trillion-dollar coin and the Federal Reserve wouldn't accept it if it did. The only option on the table is for Congress to do the right thing. God help us all.

The Platinum Coin Wouldn't Have Been Goofy to FDR (Bloomberg)

Jonathan Alter notes that despite the absurdity of ideas like the platinum coin, FDR used tactics, like moving off the gold standard, that were no less gimmicky. But he wasn't worried about his critics' jokes given how often the punch line was "and it worked."

Japan Steps Out (NYT)

Paul Krugman writes that Japan, not really a hotbed of radical economic thought, is breaking with the orthodoxy under prime minister Shinzo Abe, whose push for stimulus and inflation is upsetting austerity advocates by failing to upset anyone else.

Obama's Job One: Middle-Class Employment Problems Loom Over Second Term (HuffPo)

Dave Jamieson and Arthur Delaney note that after campaigning on a promise to restore the middle class, President Obama must now figure out how to do that when immigration reform and gun control look like safer bets than getting Congress to care about jobs.

Why the Unemployment Rate Is So High (NYT)

Laura D'Andrea Tyson argues that the evidence shows the U.S. doesn't have a structural unemployment problem, but by letting the unemployed languish for months and years with no new support or opportunities in sight, we're doing our best to create one.

Ouch! No, you're not imagining it. Your paycheck just shrank. (WaPo)

Neil Irwin notes that the expiration of the payroll tax cut became evident with the arrival of the first paychecks of 2013 last week. The question is how many Americans will make cutting back on spending their retroactive New Year's resolution.

This Week in Poverty: Smiley Calls for White House Conference on US Poverty (The Nation)

Greg Kaufmann offers a sneak peek at an upcoming forum that calls for a national plan to end poverty within the next 25 years, and how it could serve as a useful reminder to the White House that a good way to start helping people is by asking what they need.

Paying the Price, but Often Deducting It (NYT)

Question: When is a settlement not a settlement? Answer: When it's also a tax break. Gretchen Morgenson notes that banks may write their payments from recent foreclosure settlements off as business expenses, because there's no budget for shame.

Originally posted to Daily Kos Economics on Mon Jan 14, 2013 at 07:18 AM PST.

Also republished by Daily Kos.

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Comment Preferences

  •  other Geithner links (1+ / 0-)
    Recommended by:
    shrike
    BusinessInsider

    So, well done, Tim Geithner!  You helped our country get through the storm.  And we all owe you our gratitude for that.

    BusinessInsider
    There will be a lot of second-guessing, of course, but for our money Tim Geithner had an amazing run, and it can be shown in one chart, which shows the pace of jobs recoveries of various financial crisis throughout the globe and history.
    BBC
    Ultimately, Mr Geithner's legacy may be as the man who won the financial crisis but lost the economic recovery.
    The Atlantic
    Counterfactuals are always tricky, but it's best not to judge Geithner on what happened the past four years, but rather on what didn't happen.

    There wasn't a repeat of the Great Depression, with the financial system dragging the rest of the economy down into oblivion with it. As Noam Scheiber of The New Republic argued in late 2009, Geithner's stress tests didn't get enough credit at the time for ending the panic -- and without costing the government money! -- but neither did Bernanke's actions to stabilize the banks and markets.

    It could have been better -- much better -- but it could have been far, far worse, too. And that's his greatest legacy: Two and a half years after he first said so, Geithner can still welcome us to the recovery.

    •  Agree, TARP pretty much laid the course down. (0+ / 0-)

      Once passed in 2008 going back and nationalizing the banks was impossible and would have distracted Congress from HCR.   The recession ended in mid 2009 precisely BECAUSE of the bank stress tests and a return to normalcy.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Mon Jan 14, 2013 at 02:37:54 PM PST

      [ Parent ]

    •  No repeat of the Great Depression.... (3+ / 0-)
      Recommended by:
      rhauenstein, George Hier, jbob

      That depends on who you are.
      For the millions who have lost careers, homes, etc -- it looks an awful lot like the 1930s.

      Big difference?
      The rich guys got bonuses instead of trips to the windowsill.

      LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

      by dinotrac on Mon Jan 14, 2013 at 03:21:32 PM PST

      [ Parent ]

      •  Not Really (0+ / 0-)

        In the 1930s, without Social Security, Welfare, unemployment insurance, food stamps, Medicare/Medicaid, homeless shelters,  and a thousand other safety nets, the people you're talking about would be starving in the streets (and back fields), freezing to death through the past 3 Winters.

        It sucks, they shouldn't have it as hard, the government should have stimulated twice as much and twice as fast (while not keeping the banks in the same business that wrecked us). But to say these past few years have been like the 1930s were for the worst off is to lose track of just how abyssmal the Great Depression really was for those people.

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Mon Jan 14, 2013 at 07:12:00 PM PST

        [ Parent ]

        •  Yes, really. (1+ / 0-)
          Recommended by:
          jbob

          Lots of today's unemployed get no Social Security, Welfare, unemployment security, etc.  I, for one, was lucky enough to get a little bit of unemployment for a while, for which I was grateful, even if it came nowhere close to paying my bills.

          Last I looked, even here in Chicagoland, we have homeless sleeping outside in the winter, and we are barraged by reminders that starvation still exists in the United States.

          By the same token, in the Great Depression there was substantial -- if insufficient -- aid to the unemployed.  There were missions, there were soup kitchens, there were government programs (I trust you've heard of that FDR guy).

          On the other hand, the guys standing with cardboard signs at the entrances to strip malls with "Lost job. Lost home. Please help." signs aren't selling apples. That's a difference.

          So -- if you feel guilty at being one of the lucky ones, convince yourself of whatever you need to feel better.
          For millions, it looks an awful lot like the 1930s.

          LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

          by dinotrac on Tue Jan 15, 2013 at 02:17:22 AM PST

          [ Parent ]

  •  From your Slate link (1+ / 0-)
    Recommended by:
    shrike
    But what looked initially like an error by a rookie president turned into a triumph. Geithner outlasted Summers and Romer, along with three chiefs of staff and two defense secretaries. And unlike Hillary Clinton, he became not just the head of a major government agency but a real adviser to the president—part of the inner circle of decision-makers.
    ...

    But if the Geithner legacy looks bad compared to a hypothetical world of aggressive bank reform, wildly successful foreclosure relief, catch-up growth, and full employment, it looks pretty good compared to the alternatives. Joe Weisenthal observes that relative to other historical examples of financial crises, America’s recovery has been swift and strong. Looking around the world, the American economy has fared much better than the United Kingdom, Japan, or the eurozone. In a world of constraints and tradeoffs, we’ve made some pretty savvy moves.
    Perhaps the best verdict on his tenure was delivered by the man himself. Speaking to The New Yorker’s John Cassidy, he observed that policymakers screw up financial crises “because the politics are terrible” so they end up “slow and tentative and weak.” Geithner’s succeeded compared to peers around the world precisely by being faster, more decisive, and stronger in his interventions. But not always as fast, strong, or decisive as he should have been.

    Apparently, I've misunderstood your editorial comments. I thought your paragraph after the link was a summary of the linked article. On reading the article, I see it has nothing to do with it.
    •  ummm...... (0+ / 0-)

      also from that slate article link

      At the same time, the Treasury Department’s management of various foreclosure mitigation and loan modification programs has basically been a disaster. It is universally acknowledged that was has been done has failed: The disagreement here is about whether Geithner had better options available to him. The consequences rattle down to this day, as seen in the latest foreclosure fraud settlement that’s more about papering over past regulatory failures than delivering help to those who really need it. In recent years, he’s emphasized congressional constraints as a limit on fiscal stimulus, but during the Democratic-controlled 111th congress his orientation toward financial markets made him an internal proponent of Obama’s premature pivot to deficit reduction.
      •  well, jbob, (0+ / 0-)

        most people think the help for homeowners did not go well.

        Does the paragraph about that item change my point about the summary paragraph not being a summary of the article?

        •  The "summary" consists of (0+ / 0-)

          this,

          Matthew Yglesias looks back on the mixed record of Tim Geithner,
          . The rest of it is the diarists opinion. One that you seem to disagree with.
          Get over it!
          •  asdf (0+ / 0-)

            Yes, that was my comment in my original post. I figured out that it was the diarist editorializing which was not clear until I read the article. I'm surprised you think I'm not "over it."

            I was just responding to your "ummm......"

            I didn't come here to argue about the treasury secretary. I'm sorry if my posting links and other opinions has upset you.

  •  here's just a few more opinions... (5+ / 0-)
    Neil Barofsky, the former inspector general in charge of oversight at TARP and author of the new book "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street," says Geithner's comments on LIBOR aren't credible and argues that his inaction was an implicit approval of what banks were doing.

    The message to the banks was "if we commit fraud, we break the rules, don't worry, we're too big — they'll never bring the appropriate steps against us," Barofsky says in an interview with The Daily Ticker. "And that is why we've had scandal after scandal after scandal."

    This was a "global conspiracy to fix one of the most important interest rates in the world," Barofsky continues. "[Geithner] heard this information and looked the other way. Geithner and other regulators should be held accountable, they should be fired across the board. If they knew about an ongoing fraud, and they didn't do anything about it, they don't deserve to have their jobs. I hope we see people in handcuffs."

    http://finance.yahoo.com/...
    http://www.businessinsider.com/... Former banking Regulator William Black goes on the attack against today's regulators pretty hard in an interview with Newsweek. He calls them all failures, while heaping the hardest scorn on Tim Geithner, who he labels “a disaster."
    http://www.nationofchange.org/...
    WILLIAM BLACK: OK. First, Geithner is a principled person who caused the crisis. He was supposed to be the top regulator preventing it in New York and did nothing. Second, he has created crony capitalism, American style. Third, those regulations in fact will not prevent future crises and were designed to make sure they were not. And I agree strongly with Matt that the choice of Jack Lew is to not only produce continuity with Geithner’s disastrous failed policies, but to signal the administration’s desire to continue the bailout of Wall Street.

    AMY GOODMAN: Matt Taibbi?

    MATT TAIBBI: Yeah, I think the legacy of Tim Geithner is simple. He’s the architect of "too big to fail." And that’s going to be, historically, his legacy. When this all blows up—and it’s going to blow up, for sure, because it can’t—things can’t continue the way they are right now—people are going to look back in history, and they’re going to say, "Who was to blame for this?" And Timothy Geithner is going to be the guy who designed this entire system.

    JUAN GONZÁLEZ: Of course, and he will always be remembered as the first treasury secretary who neglected to pay his own taxes.

    (emphasis mine)

    without the ants the rainforest dies

    by aliasalias on Mon Jan 14, 2013 at 11:46:13 AM PST

    •  The LIBOR scandal was a gnat in a tornado (0+ / 0-)

      contributing nothing to the financial crisis and indicative of little more than back room shenanigans.  

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Mon Jan 14, 2013 at 02:34:08 PM PST

      [ Parent ]

      •  This LIBOR scandal? (4+ / 0-)
        Recommended by:
        DocGonzo, aliasalias, George Hier, jbob

        Described here?

        And this could finally be enough to make Americans stop reacting to the Libor scandal with "a shrug," as Joe Nocera recently put it, and push them closer to believing what Robert Shapiro, founder of economic advisory firm Sonecon, calls possibly "the biggest financial fraud in history."
        And here:
        The banks' alleged manipulation of the key benchmark interest rate may have cost municipalities, hospitals and other large non-profits as much as $600 million a year, according to one expert.
      •  Are You a Banker? (2+ / 0-)
        Recommended by:
        midwesterner, aliasalias

        Because among bankers, getting away with the LIBOR scam is proof positive that they can do whatever they want. And they want to steal even more than they stole using the LIBOR.

        I know, because I worked in finance (again) in Midtown Manhattan through 2009, inside the databases of some of the biggest hedge funds in the world (who stayed in the same business throughout, and still today). I not only worked with many of these people, but I got many of the same email distributions, and implemented their shared business models.

        What's your credentials for dismissing the LIBOR scam?

        "When the going gets weird, the weird turn pro." - HST

        by DocGonzo on Mon Jan 14, 2013 at 07:15:22 PM PST

        [ Parent ]

    •  William Black (6+ / 0-)

      clearly states the case against Geitner.

      Here's from Black's 1/10 piece on NEP: [my highlights]

      Obama spread the same dangerous myth about austerity. Obama's initial policy was influenced primarily by his principal economic advisers, Larry Summers and Christina Romer. They favored stimulus and understood it needed to be much larger than the amount that the White House felt could be passed. Over time, however, Treasury Secretary Geithner became far more dominant as the strength of his personal relationship with President Obama grew. Geithner was a Republican who had become an Independent as a fig leaf. He shared the views of so many elite bankers who he had served as President of the Federal Reserve Bank of New York. Geithner wanted austerity, including severe cuts to social programs and the safety net.

      "From Zach Goldfarb's excellent profile of Treasury Secretary Timothy Geithner's success inside the Obama administration:

      … Once, as [then chairwoman of the Council of Economic Advisers Christina] Romer pressed for more stimulus spending, Geithner snapped. Stimulus, he told Romer, was 'sugar,' and its effect was fleeting. The administration, he urged, needed to focus on long-term economic growth, and the first step was reining in the debt.

      Wrong, Romer snapped back. Stimulus is an "antibiotic" for a sick economy, she told Geithner. 'It's not giving a child a lollipop.'

      In the end, Obama signed into law only a relatively modest $13 billion jobs program, much less than what was favored by Romer and many other economists in the administration."

      Geithner is not an economist and what he "knows" about economics is mostly dangerous myths. That is one of the reasons why Geithner was such a major contributor to never detecting or countering the epidemic of accounting control fraud that drove the financial crisis, hyper-inflated the housing bubble, and produced the Great Recession. It took some significant arrogance or sexism to tell one of the nation's most famous macro-economists that she was 180 degrees wrong about macro-economics.

      The "$13 billion jobs program" is a sick joke as a response to the Great Recession. Our central economic problem is jobs. The central jobs problem is not a lack of training -- it's a lack of demand. If consumers don't buy, employers don't hire. The inadequacy in demand is measured in the trillions of dollars. A trillion is a thousand billion. A $13 billion program is one-one- hundredth of the appropriate size to begin to deal with the Great Recession. Why not adopt a federal jobs guarantee program that ends the waste and injury of people willing and able to work being kept idle? Why is it politically possible to pay people not to work but not to give productive jobs to those who want to work and are able to do so?

      President Obama's comments show that he does not understand these issues. First, he credits job gains to Geithner's "steady hand."

      "And thanks in large part to [Treasury Secretary Geithner's] steady hand, our economy has been growing again for the past three years, our businesses have created nearly 6 million new jobs."
      … If Geithner had not helped block the push by Romer and Summers within the administration for greater stimulus the U.S. recovery would be far more robust and millions more Americans would be employed. (In fairness, the Republicans and conservative ("Blue Dog") Democrats who killed the revenue sharing portion of the stimulus bill and insisted that much of the stimulus had to be in the form of the extension of tax cuts for the wealthy, which have a far smaller stimulus effect than alternatives, also cost millions of Americans their jobs.)

      Geithner led the administration's push to end the single-most effective stimulus program - not collecting the full payroll tax.

      Geithner led the charge raise the tax and kill the million jobs.

      The payroll tax is an extremely regressive tax, so the partial tax "holiday" was particularly effective in getting cash into the wallets of those who most needed the money and were most likely to spend it on their pressing needs. (A Federal Reserve study was recently released showing the "multiplier" (stimulus) effect of the "holiday" was even greater than anticipated.) Collecting the full tax, which resumed in January 2013, is an act of austerity.

      "Independent analysts say that the expiration of the tax cut could shave as much as a percentage point off economic output in 2013, and cost the economy as many as one million jobs. That is because the typical American family had $1,000 in additional income from the lower tax."

      Geithner led the charge raise the tax and kill the million jobs.

      "'This has to be a temporary tax cut,' said Timothy F. Geithner, the Treasury secretary, testifying before the Senate Budget Committee this year and voicing the view of many in the White House and on Capitol Hill. 'I don't see any reason to consider supporting its extension.'

      The deficit fell because we improved our recovery through the "automatic stabilizers." These stabilizers do not need new legislation to create them, so they act "automatically" to respond to a recession (or inflation). In a recession, the stabilizers work in a counter-cyclical (stimulus) fashion to make recessions less severe and long-lasting. The stimulus program expanded this stimulus. As economic growth increases due to the increased demand, unemployment falls and revenues rise while expenditures for the unemployed fall. The result is that the federal budget deficit falls. Had we followed Geithner's advice and inflicted austerity we would be back in recession and facing growing deficits.

      That's a wrap.

      United We Understand

      by dorkenergy on Mon Jan 14, 2013 at 04:32:57 PM PST

      [ Parent ]

  •  The Platinum Coin Wouldn't Have Been Goofy to FDR (2+ / 0-)
    Recommended by:
    dorkenergy, DocGonzo

    That was was my point.    Obama talks too much.  All show and no go.   All he had to do was keep his mouth shut and let the GOP place the bet.

    We need an FDR for this country.  No more moderate Republicans.  

    What we need is a Democrat in the White House.

    by dkmich on Mon Jan 14, 2013 at 02:56:23 PM PST

  •  WRT Tyson -- You think? (0+ / 0-)

    I realize that nobody likes anecdotal evidence, but her conclusions are no surprise to those of us who have spent much time looking for work, showing up at networking groups, etc.

    I might quibble about her contention of no structural unemployment, but only in the sense that an economy that has stopped making many things and thinks its ok bend over backwards to jump through the hoops that might save some money by employing help half a world away.

    In other words -- Yes. The problem is that we don't have enough jobs.  Maybe it wouldn't hurt to look at the reasons why we don't have enough jobs.

    LG: You know what? You got spunk. MR: Well, Yes... LG: I hate spunk!

    by dinotrac on Mon Jan 14, 2013 at 03:20:20 PM PST

  •  I'm long-term unemployed... (0+ / 0-)

    ...(although with a brief, notable break) and, at my age, I've just about given up hope of ever getting another good job, let alone any job at this point. If it wasn't for the generosity of friends and family I'd be out on the street.

    "Know that it is easier to get into something than it is to get out of it." - Donald Rumsfeld

    by teej on Mon Jan 14, 2013 at 03:21:32 PM PST

  •  Federal Reserve Commits to Sedition (0+ / 0-)
    the Treasury Department says it won't mint a trillion-dollar coin and the Federal Reserve wouldn't accept it if it did. The only option on the table is for Congress to do the right thing. God help us all.

    OK, the Treasury won't mint a $TRILLION coin - because the president won't ask it to. But if it did, the Federal Reserve damn well better have taken it. The Fed doesn't have the power to decide that money minted and assigned a value by the Treasury is unacceptable. Saying it wouldn't accept it is swearing to commit sedition at best.

    Even in this inconsequential "almost did but didn't" it's clear that the Federal Reserve is totally and literally out of control. Bernanke, the Fed Chair, should be in jail.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Mon Jan 14, 2013 at 07:09:17 PM PST

  •  Re: Paycheck just shrank (0+ / 0-)

    I don't have a problem with full FICA being reinstated.  I do have a problem with my taxes going up by 2% of my income; while if I was fortunate enough to make $400,000 my taxes would only have gone up about .5% because of the cap on payroll taxes.  Should have increased everyone's taxes by 2% up to 400/450K and used the extra FICA to help pay back for the shortfall over the last few years...

    Another regressive tax increase for the true middle class.

  •  Why the Unemployment Rate Is So High (2+ / 0-)
    Recommended by:
    George Hier, OLinda

    The unemployment rate is high because we have a national policy of shipping wealth-producing jobs overseas. Since the late 1970s, when manufacturing peaked in the U.S., we have had an average of 0.9% higher unemployment. This is directly related to our (poor) trade policies.

    In addition, wages are suppressed. Add it all up and it's been a tough 30 years or so for workers and the U.S. economy.

    It's no mystery why unemployment is high. We plan it and we manage it that way. The only question is when we'll run out of patience with this policy or money. Oh, we ran out of money, so I guess that leaves only patience.

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