I just saw Tim Geithner on ABC interviewed by George Stephanopolis. George's staff was well prepared. George, himself, had no idea how to ask a follow-up question.
Tim skated free.
Let it be: Geithner's tact is one we all could learn from, but then we would never have meaningful discourse. Tim repeatedly ignored the brunt of George's questions and went on to make his assertions about policy. On the subject of the AIG bailout monies paid to foreign banks, Tim dodged saying 'we had no authority'. George did not ask what would you do now? Or, was money given to AIG initially with too few strings attached? Or, is there any way to go after those funds now, after the fact? George just let it go.
There won't be an answer, let it be: So if you watched ABC you got very little in the way of cross examination. Timmy-G laid out his plan said it was the best of series of bad choices and said he would never bailout a banker to help him- it's all for the economy.
Different strokes for different folks: As I look at the economy I have a flip-flop of the government's forecast. It has slow growth with momentum building to as much at 4% growth. I see strong growth early in the expansion then fading and becoming challenged.
'U' 'V' rays: The economy is in recession. It is a mature downturn. The recession has been virulent. We are looking to recovery. The early recovery period is usually characterized by STRONG growth. GDP is always strong early on in the expansion; in any recession with large job losses, job creation EARLY in the recovery period tends to strong. There is NO example in the Post-War period of a recession with 'V'-shaped job losses and a 'U'--shaped recovery. Yet that is the administration forecasts. I think they have their forecast profile backwards.
Cyclical push meets structural sag: To me the issue is this: as we lose fear and the economy rebounds some jobs will come back quickly. Some of the depressed areas will revive quickly. And once we have shot back part way, how soon do the long term or structural issues begin to bite? After a rapid recovery of some of the easiest demand, the problems of a less vibrant auto sector, lower pay for their remaining workers, recovery in housing but still huge set backs to wealth there- same for stocks - will take a toll on how fast the economy will grow. The intermediate term growth potential of the economy has been knocked for a loop but the potential for strong growth early in THIS recovery is still excellent.
Ponder those trade offs. And let's hope that someone with the ability to ask a better follow up question interviews Timmy sometime soon.