I’m not a big fan of the Obama Administration’s financial team. Too many are the products of Wall Street and have twisted the old “What’s good for GM is good for America” phrase into “what’s good for Wall Street is good for America.” Back in the early 1990s when banks became insolvent, the Feds stepped in, seized the institution, sold off all the good assets to healthier banks and managed the poor ones through the Resolution Trust Corporation. The executives who ran those banks into the ground weren’t retained and they certainly weren’t given tax payer funded bonuses. Why we weren’t able to do the same in early 2008 escapes me. I think the primary reason was the Wall Street DNA inhabiting the Obama financial team with a small dose of “we don’t want the opposition to label us socialists who are nationalizing banks.”
So with that as my less-than-lukewarm introduction, here’s the high points of “Welcome to the Recovery”, an op-ed by Secretary Geithner in today’s New York Times: While repeatedly sympathizing with the unemployed worker for whom there is no recovery, Geithner writes that “a review of recent data on the American economy shows that we [are] on a path back to growth.” As good news, he cites:
- exports are booming because of American competitiveness
- Private job growth has returned (only not as fast as we would like)
- Businesses are sitting on a load of cash which is available for investment and growth
- A leaner, more efficient auto industry is bouncing back
- The TARP program has already earned a $20 billion profit and will soon be out of business
Geithner says that “new data show that this recession was even deeper than previously estimated” and the velocity of the economic fall that began in 2007 (a year before Obama became president) led companies to “cut payrolls and investment savagely.” He suggests that the depths of the collapse would have been much greater but for the steps taken by the Obama administration and concludes by saying “we suffered a terrible blow, but we are coming back.”
I do believe that our economic troubles would have been far worse had the Federal government not rescued the banks and not funded the stimulus bill (I’m also one who believes that the stimulus measures were insufficient and had they been bigger, the recovery would be farther along by now – but that’s another post). One phenomenon mentioned by Geithner has received significant play elsewhere in recent days, and that’s the speed with which American companies shed jobs. Capitalism lacks a conscience and compassion, so when chopping employees benefits the bottom line, the employees are quickly cast aside. The main reason American businesses have been able to horde so much cash is through cuts in payroll. It’s not that corporate America couldn’t afford to keep the workers, it’s that the bottom line benefited from shedding them. And that’s why the government must be there with unemployment benefits, job retraining programs and all the other things that comprise the social safety net.
Too bad the Treasury Secretary is more enthusiastic about increased corporate competitiveness than he is about easing the upheaval to the lives of displaced workers whose firings so benefited the bottom line.