Tim Geithner, Superstar

The new secretary of the treasury, Tim Geithner, was anointed our knight-in-shining-armor by an adoring press. Surely the ‘genius’ (have you noticed the trend that all of Obama administration’s appointees are dubbed ‘smart’), who as assistant secretary for international affairs of the IMF, led the Asian markets out of their crises in the ‘90s, would come to the rescue again, this time for US markets. However, it appears that the markets themselves have not been so admiring of either his credentials or his financial rescue plans (or lack thereof) for the US; the stock market has continued its decline, and bank stocks in particular have plummeted since his appointment.   

Perhaps the financial ‘boots on the ground’ know something about Geithner that lay-people do not? Perhaps they understand that the economic solutions that Geithner imposed on the Asian markets were not exactly as brilliant as they have been trumpeted to have been? According to the former Prime Minister of Australia (who, as an economist, was also Treasurer for eight years), the economic solutions applied by Geithner to Indonesia were totally wrong, due to a flawed diagnosis of the problem (read the article if you would like the details); suffice it to say, that the ‘solution’ he imposed caused a precipitous drop in that country’s GDP--and political turmoil that lasts till this day.

The extent to Geither’s IMF solutions were wrong is seen in the fact that NO Asian countries have asked for help from the IMF SINCE! In addition, it is thought that China, not wanting to ever have to deal with an IMF imposed ‘solution’ itself, began investing in US debt as financial backup--this in turn allowed for credit market conditions (cheap credit) that allowed for the over-borrowing/overspending that precipitated the credit crisis that is rocking the global economy today!

We don’t know much of Geither’s plans, but what has the Obama administration done so far? Well, implausibly, they have demanded of China that they buy YET MORE of our debt! Talk about adding fuel to the fire. We can only hope that Geithner asks for outside help when determining what other ‘solutions’ to apply to our economic ills.