“The recognition that things that are not sustainable will eventually come to an end does not give us much of a guide to whether the transition will be calm or exciting.” – Timothy Geithner, US Treasury Secretary
I’ll admit I haven’t been a close follower of Treasury Secretaries or Fed Chairmen over my adult life. That said, I can’t remember the last time we had such a baby in this post. Tim Geithner is just an absolute spoiled, whinny brat; pursing his lips and threatening to hold his breath unless he gets his way.
Congressional Republicans have feigned at the prospect of delaying a rise in the US debt ceiling, currently $14.3 trillion (That’s around $50,000 in debt for every person in your household). This is all part of the dance around spending cuts and budget negotiations. This time though, there are possibly enough Tea Partiers to make serious noise about the issue. (In the end, I suspect a debt-ceiling increase will happen.)
Mr. Geithner is distraught at the very prospect that his Department will cease to function in its normal way – that he will lose significant power on the government scene. I mean, it took him quite some time, working hard, greasing palms at his Goldman Sachs connections, “forgetting” to pay taxes while working for the IMF, and waiting for his turn to be Treasury Secretary. Now, the whole thing could collapse on his watch if the debt ceiling is not increased … and he’s panicking and throwing temper tantrums.
Earlier he made comments (story here) that Republicans would be to blame if the U.S. defaulted (i.e. didn’t borrow more and failed to continue operating and paying interest on current debts). Good to see the Treasury Secretary staying out of domestic policy. (Like when Geithner said a while back that the U.S. could tolerate tax increases and not harm the economy … I suppose those don’t apply to him though.) There are so many plausible reasons why Geithner is charging ahead like this, and your guess is as good as mine. Some possibilities:
- Geithner is a smarmy [redacted] who doesn’t have the first clue about how to negotiate and is stamping his feet
- Geithner is actually concerned that the Tea Party make succeed in thwarting the debt-ceiling increase
- Geithner knows there’s no way the Republicans will force a default, and wants to look like he caused them to change course
- Goldman Sachs is massively exposed to risk of U.S. default, and Geithner must do any and everything to prevent it
- Goldman Sacks is perfectly leveraged and hoping for a default to make wads of cash – so Geithner is playing the part of the village idiot hoping his reverse psychology will get Republicans to actually go through with threats to keep the current debt-ceiling
You see, there are just too many ways to peel this. One thing is clear though. In a government of the people, by the people, and for the people; an unelected Treasury Secretary lecturing elected officials about their responsibilities and demanding they give his department trillions of dollars “or else” is unseemly to say the least.