Does He Pass the Test? (Paul Krugman Reviews Geithner's new book)

[n2doc]

Midway through Timothy Geithner’s Stress Test, the former treasury secretary describes a late-2008 conversation with the then president-elect. Obama “wanted to discuss what he should try to accomplish.” Geithner’s reply was that his accomplishment would be “preventing a second Great Depression.” And Obama shot back that he didn’t want to be defined by what he had prevented.

It’s an ironic tale for Geithner to be telling, although it’s not clear whether he himself realizes just how ironic. For Stress Test is meant to be a story of successful policy—but that success is defined not by what happened but by what didn’t. America did indeed manage to avoid a full replay of the Great Depression—an achievement for which Geithner implicitly claims much of the credit, and with some justification. We did not, however, avoid economic disaster. By any plausible accounting, we’ve lost trillions of dollars’ worth of goods and services that we could and should have produced; millions of Americans have lost their jobs, their homes, and their dreams. Call it the Lesser Depression—not as bad as the 1930s, but still a terrible thing. Not to mention the disastrous consequences abroad.

Or to use one of the medical metaphors Geithner likes, we can think of the economy as a patient who was rushed to the emergency room with a life-threatening condition. Thanks to the urgent efforts of the doctors present, the patient’s life was saved. But while the doctors kept him alive, they failed to cure his underlying illness, so he emerged from the procedure partly crippled, and never fully recovered.

How should we think about the economic policy of these past seven or so years? Geithner, while acknowledging the disappointments, would have us view it mainly as a success story, because things could have been much worse. And the middle third of his book, a blow-by-blow account of the acute phase of the financial crisis, carries the implicit and sometimes explicit message that things would indeed have been much worse but for the heroic actions of a handful of high officials, himself included.

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http://www.nybooks.com/articles/archives/2014/jul/10/geithner-does-he-pass-test/?insrc=hpss

[JayhawkSD]

1. Implied but not stated here...

Is the great failing of "health care reform." Rahm Emmanuel tried to talk Obama out of it, and Rahm was right. It was not the primary concern for the American people, and it was not the primary need. Every time the economy was mention he casually tossed it aside with the tacit admission of failure; "Think what would have happened..."

Obama took a passing swipe at the economy with a "stimulus" that was too small and consisted far too much of tax cuts, and then allowed the focus to be on the lesser need of "health care reform" for a full year. It wasn't that it was not worth doing, of course it was, but it distracted from the greater need which was putting people back to work and restoring the working class. Five years later 50 million people are still not back to work, and wages have risen by only 2%/yr, barely keeping up with inflation.

Fifty million people were suffering for lack of health insurance, but 200+ million were suffering from no job or underpaying jobs, and they still are today.

[msongs]

2. the only current jobs program is privatization and destruction of public services nt

[blkmusclmachine]

3. ^Sadly, this.^

[amandabeech]

5. And increasing the number of H-1B workers in fields where there are

plenty of decently qualified citizens, while doing nothing to prevent offshoring of jobs.

And we wonder why voter turn-out is so low.

[yurbud]

4. Geithner's job was to funnel our tax money to Wall Street and keep the pitchforks at bay

which he did well.