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Politics : View from the Center and Left

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To: JohnM who wrote (253191)	6/18/2014 2:40:06 AM
From: koan	of 541548

Geithner is a sleezeball (my opinion). Krugman on Geithner: The best guess is that Geithner was in fact unenthusiastic about stimulus and more or less hostile to mortgage debt relief. But did this matter? You can argue that a bigger stimulus plan would have failed to pass Congress; you can argue that mortgage refinancing would either have proved impossible to implement or have provoked a huge political backlash. The truth is that we’ll never know, because the Obama administration never really tried to push the envelope on either fiscal policy or debt relief. And Geithner’s influence was probably an important reason for this caution. Geithner saw the economic crisis as more or less entirely a matter of lost confidence; he believed that restoring that confidence by saving the banks was enough, that once financial stability was back the rest of the economy would take care of itself. And he was very wrong. " The only way you can consider this record a success story is by comparing it with the Great Depression. And that’s a pretty low bar—after all, aren’t we supposed to know more about economic management than our grandfathers did? In fact, we did have both the knowledge and the tools to fight this disaster. We know a lot about how fiscal policy works, and the United States clearly had the borrowing capacity to spend more on fighting unemployment. Whatever Geithner may say, it’s clear that a lot more could also have been done to reduce the burden of mortgage debt. Yet we didn’t do what needed to be done. I like Geithner’s metaphor of a stress test—and his book is very much worth reading, especially for its account of the crisis. But he’s wrong about the outcome of that test. We can argue about how much of the blame rests with the Obama team, how much with the crazies in Congress who met every administration initiative, no matter how reasonable, with scorched-earth opposition. But the overall grade seems clear. We didn’t pass the test—we failed, badly.

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