Prologue
I do not know this man personally and I do not like ad hominem attacks. However, sometimes it is easier to expose the excesses of Big Government by focusing on some of its prominent representatives. In the end it is individual humans in power who either promote individual liberty or who take it away, latter because they think they are superior or paternalistic etc.
Trigger
Recently, Geithner's book “Stress Test” was published. Here is a review published by the Wall Street Journal (Source1). I freely admit, I do not have the time to read a 580 pages tome.
Timothy Geithner recently (5/13/2014) also wrote a defensive op-ed article for the Wall Street Journal titled “The Paradox of Financial Crises/Aggressive government intervention will lead to a stronger financial system less dependent on the taxpayer.” (Source2)
In this blog, I will refer here to his op-ed article and the above review of his book.
Some Questions
- Who made Timothy Geithner’s stellar career possible?
- Was he a useful idiot?
- Is not President Barack Obama ultimately responsible that this man became the U.S. treasury secretary?
The Man Who Did Not Pay His Taxes
“During his confirmation, it was disclosed that Geithner had not paid $35,000 in Social Security and Medicare payroll taxes from 2001 through 2004 while working for the International Monetary Fund.[32] The IMF, as an international agency, did not withhold payroll taxes, but instead reimbursed the usual employer responsibility of these taxes to employees. Geithner received the reimbursements and paid the amounts received to the government, but had not paid the remaining half which would normally have been withheld from his pay. The issue, as well as other errors relating to past deductions and expenses, were noted during a 2006 audit by the Internal Revenue Service” (Emphasis added; Wikipedia)
I believe, there were more details revealed to his lapses to honestly pay his taxes, but I do not have the time to do more research now.
Salient Excerpts From The Book Review
I added emphasis.
- “His core principle is that, during a crisis, the creditors of large financial institutions should not suffer any losses.”
- “But Mr. Geithner intervened to give the firm [Bear Stearns] short-term liquidity and arranged a sale to J.P. Morgan, a move that put U.S. taxpayers on the hook for some of Bear's risky mortgage paper. And so the taxpayer safety net was stretched to cover not just commercial banks but Wall Street investment houses as well.”
- “Regardless of the story Mr. Geithner is telling now, there remains the question of why exactly America couldn't survive without a firm like Bear Stearns, which held no taxpayer-insured deposits.”
- “Mr. Geithner tells the story of Warren Buffett approaching him at a conference shortly after the rescue to offer congratulations. "I was sort of hoping you wouldn't do it, because then everything would have crashed and I would have been first in line to buy," said Mr. Buffett, according to the book. "It would have been terrible for the country, but I would've made a lot more money." A scenario in which Mr. Buffett is snapping up bargains doesn't sound like Armageddon.”
[Geithner, the fool, tries to brag that he had the backing of Warren Buffet, the buffoon. Indeed had some of these Wall Street investment banks gone bust others domestic and foreign would have snapped up the pieces.] - “One of the themes in "Stress Test" is Mr. Geithner's difficulty in understanding the health of large financial firms. He admits that he didn't see the mortgage crisis coming and didn't grasp the severity of the problems after it appeared. He didn't require that the banks he was overseeing raise more capital because his staff's analysis couldn't foresee a downturn as bad as the one that occurred.”
[Thank you Mr. Geithner for admitting total incompetence!] - “None of this is particularly surprising in a man who, at the time he became president of the New York Fed, had never worked in finance or in any type of business—unless one counts a short stint in Henry Kissinger's consulting shop. At Dartmouth, Mr. Geithner "took just one economics class and found it especially dreary." After three years at Kissinger Associates, he spent 13 years at the Treasury Department, becoming close to both Robert Rubin and Larry Summers, and then worked at the government-supported International Monetary Fund. Messrs. Rubin and Summers recommended him to run the New York Fed. "I felt intimidated by how much I had to learn," he writes of taking up the job in 2003. Mr. Geithner's New York Fed was the primary regulator for Citigroup”
- “Mr. Geithner scoffs at what he calls the "moral hazard fundamentalists" and "Old Testament" types who worry that bailing out financial firms will encourage even riskier behavior. He says that the financial rescue programs enacted in the crisis years were a success because the alternative—which no one can ever know—would have been far worse. ”
[Fools are men of action and overconfidence!]
Salient Excerpts From His Op-Ed Article
To sum up: Timothy Geithner never comprehended the function and importance of the FDIC insurance of bank deposits implemented nor the unemployment insurance in the wake of the Great Depression and other historic economic recessions. He does not even mention these important instruments in his op-ed.
Emphasis added.
- “Meg McConnell, a colleague, pressed the mute button on the speakerphone [during a conference call with Hank Paulson and Ben Bernanke during Autumn 2008] and pleaded with me to tell them that if they didn't go to Congress now, "there will be shantytowns and soup lines across the country."”
[Is this really his lame excuse! Was he intimidated by this lady? Who was this lady making such hysteric comments?] - “We were in the midst of a classic financial panic—similar to the bank runs in the Great Depression. But most people did not yet feel the impact of the run. The losses suffered on Wall Street seemed welcome and deserved, and of no consequence to the vast majority of Americans.”
[What an idiot! He does not realize that he contradicted himself within two sentences. When was there a financial panic comparable to those experienced earlier in the 20th or 19th century with bank runs?] - “There was little memory of how panics kill economies, but the panic was already killing ours. American households lost 16% of their wealth in 2008 alone, several times as large as the losses at the start of the Great Depression, during which unemployment rose to 25% and total output fell more than 25%.”
[Obviously, Mr. Geithner had little memory why we have FDIC deposit insurance and unemployment insurance, which did not exist at the outset of the Great Depression. He also has little understanding that it was a socialist U.S. President (FDR) who needlessly prolonged the Great Depression by several years. There could be more said about Geithner’s stupid remarks here.] - “And so the government had very limited weapons with which to combat the financial crisis of 2008”
[We The People should be very thankful that this fool as well as Hank Paulson and Ben Bernanke did not have more powerful weapons at the time! Ben Bernanke, Hank Paulson, and Timothy Geithner could have prevented the meltdown in the residential real estate market by raising interest rates and consequently enforcing higher lending standards such as minimum down payments etc.] - “ In a financial crisis, the natural instinct is to let creditors suffer losses, let firms fail, and protect taxpayers from any risk of loss. But in a financial panic, a strategy based on those instincts will lead to depression-level unemployment.”
[Timothy Geithner has no clue how a free market economy works!] - “Instead, the government and the central bank have to step in and take risks on a scale that the private sector can't and won't. They have to reduce the incentive for investors, lenders and depositors to run and liquidate assets in panic selling. They have to raise the confidence of businesses and individuals that there will not be a system wide collapse—breaking a vicious cycle in which the fear of a financial-system collapse and a deep recession feed on each other and become self-fulfilling.”
[The central planner is speaking! Only the government can rescue us from government’s big mistakes in the first place! That is laughable!] - “Breaking this cycle requires a massive injection of cash into the economy, as directly as possible into the hands of those who will spend it, to offset the loss of private earnings and the collapse in private demand.”
[Why did Geithner not try instant moratorium on all federal tax payments?] - “Herein lies the central paradox: The more aggressive the government is in designing a rescue plan, the easier it is to force more restructuring in the financial sector, and the better the chances of leaving the surviving system stronger and less dependent on the taxpayer.”
[Who is this central planner trying to fool? What we are left with is now is a more government controlled financial sector, which was prior to the Great Recession already highly regulated and supervised.] - “But we did do the essential thing, which was to prevent another Great Depression, with its decade of shantytowns and bread lines. We put out the financial fire, not because we wanted to protect the bankers, but because we wanted to prevent mass unemployment.”
[I don’t think I have to comment this nonsense anymore!]
Financial Crisis Of 1907
Before the Fed was established in 1913 leading men of private enterprises would come together to prevent a deepening of economic recessions or financial panics.
What did John Pierpont Morgan and other businessmen do back then, they pledged their own money!
By the way, the Financial Crisis of 1907 was also caused by among other things massive government failure when the U.S. Congress passed the Hepburn Act of 1906 establishing the Interstate Commerce Commission which set maximum prices for railroad rates. How much dumber does it get when Big Government gets involved!
Why is a highly educated man like Timothy Geithner not smarter?
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