I saw this over at TPM, and felt that it made a good point to intervene in Badabing's Rec List Diary. I have a few comments on that diary, which I'll follow up on in a moment. But first, consider this statement from our Treasury Sec.:
The secretary agreed that the national jobless rate — now at 9.7 percent — is "still terribly high and is going to stay unacceptably high for a very long time" because of the damage caused by the recession.
The self-irony in Sec. Geithner's statement demonstrates, to me, just how fundamentally out of touch with reality he and the financial industry, and indeed, the White House and Congress, appear to be when it comes to the state of the economy. He makes a statement that is apparently supposed to show that he and the administration "get it" (remember, not "getting it" was G.H.W. Bush's Achilles' heel in '92), but which actually only demonstrates that they appear to have no plans to actually do something about the problem.
"The secretary agreed that the national jobless rate — now at 9.7 percent — is "still terribly high and is going to stay unacceptably high for a very long time" because of the damage caused by the recession."
If it is truly unacceptably high, then why does it appear that Congress and the Administration are in fact accepting that it is going to stay "unacceptably high" for a very long time? Isn't that the classic definition of an oxymoron? As Dictionary.com puts it:
"a figure of speech by which a locution produces an incongruous, seemingly self-contradictory effect, as in "cruel kindness" or "to make haste slowly."
If it is true that joblessness and underemployment are "unacceptably high," than the Administration and Congress would not be accepting of the situation, and would be taking action to make sure that the unemployment rate did not remain "unacceptably high" for a very long time. What the quote really says/reveals is that there is no sense of urgency in dealing with the situation, a fact made all the more apparent by the length of time which has already passed without any vigorous action on the matter, and the apparent lack of commitment to any real action going forward, (think, a modern version of the WPA, for example).
We've gone beyond mere spin; the administration is now actually using doublespeak. Worse yet, it appears that they are actually engaged in doublethink.
" To know and not to know, to be conscious of complete truthfulness while telling carefully constructed lies, to hold simultaneously two opinions which cancelled out, knowing them to be contradictory and believing in both of them, to use logic against logic, to repudiate morality while laying claim to it, to believe that democracy was impossible and that the Party was the guardian of democracy, to forget, whatever it was necessary to forget, then to draw it back into memory again at the moment when it was needed, and then promptly to forget it again, and above all, to apply the same process to the process itself -- that was the ultimate subtlety; consciously to induce unconsciousness, and then, once again, to become unconscious of the act of hypnosis you had just performed. Even to understand the word 'doublethink' involved the use of doublethink. "
" The power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them....To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies — all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.
As the article, and the interview, continue, Geithner's penchant for the use of doublethink continues as well:
Geithner said he hopes skeptical voters will note legislation moving through Congress to bring reforms to the financial system.
"What happened in our country should never happen again," he said. "People were paid for taking enormous risks. It was a crazy way to run a financial system." Geithner said, "It's the government's job ... to do a better job of restraining that kind of risk-taking."
This, from the man in charge of the New York Fed when these insane risks were taking place. As Robert Reich observed only yesterday:
The losses from those deals still total tens of billions, and taxpayers are ultimately on the hook. But the public never knew. There was no congressional oversight. It was all done behind closed doors. And the New York Fed -- then run by Tim Geithner -- was very much in the center of the action.
Much of what Ben Bernanke and Tim Geithner did (when Geithner was at the New York Fed) in 2008 was presumably necessary. But the public has no way of knowing. The public doesn't even know who else the Fed has bailed out, or what entities it will bail out in the future. All we know is the Fed secretly bailed out Bear Stearns and AIG and thereby subjected taxpayers to risks that remain even today, without informing the public. That's not a record on which to build public trust.
Huffpost.
Are you seeing the doublethink yet? Tim Geithner was in no small part in charge of the bailouts, which he is now telling Matt Lauer (and everyone else) need to be stopped, and should never happen again, and his solution is the financial reform legislation being put together in Congress, i.e., by Chris Dodd and the Senate. But what is the practical effect of that legislation?
As for Dodd's treatment of Too Big To Fail, Hoenig said the bill puts too much power in the hands of regulators.
"What I worry about [is] if you have a large institution, and it got into very serious trouble and you only have a weekend to take care of it, the procedures under the Dodd bill would make that very difficult," Hoenig said.
"Let's say you were coming into Monday morning and you didn't have the ability to get to the judges in time to get this thing approved, and you had to get to another day. What you would tend to do is lend to that institution -- if it were not a commercial bank, you would even use the [Fed's] so-called 13-3 authority... and you would lend to it," he said in a reference to the legal authority that the Fed claimed gave it the power to lend taxpayer money to AIG. "So you would still have it as an operating bank, you would not have taken control of it, not put it in receivership yet, and yet you would be bailing it out. That's what we have to avoid.
"There's still this desire to leave discretion in the hands of the Secretary of the Treasury, and while I understand that desire -- because you never know what the circumstance is going to be -- the problem is in those circumstances you always take the path of least resistance because of the nature of the crisis.
That's according to Federal Reserve Bank of Kansas City President Thomas M. Hoenig .
Or, as Simon Johnson puts it:
As for the financial reform bill now before Congress, Secretary Geithner is completely wrong if he thinks it "has teeth." There is simply nothing there that will rein in our largest financial institutions -- and you can see this in the financial markets. Even as some sort of legislation moves closer to passing, massive banks retain their funding advantage -- and continue to look for ways to get larger (see Jamie Dimon's letter to his shareholders this week).
And as a symptom of these continuing problems, see the latest round on executive pay at banks -- we're back to cash and other short-term oriented payouts. This administration recognizes that such incentives are dangerous -- particularly when combined with implicit government guarantees. But they can do nothing -- and will do nothing -- about this or about the deeper underlying issues.
Geithner is far too compromised to be a trustworthy source on any of this, IMO. He has fought, and continues to fight, against any kind of disclosure of what the Fed did under his watch, has fought against regulations of CEO compensation, has fought against disclosing to the public many of the deals made between the Treasury and the bailed out banks since he became SecTreas., etc. More importantly, he's so far gone into the world of doublethink that he can make statements, like the one he made to Matt Lauer about joblessness "stay[ing] unacceptably high for a very long time" without even being aware of the oxymoronic nature of the statement.
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On another note, I thought about re-posting my June 2008 diary, "The Coming Battle for Barack Obama's Soul" in response to Badabing's diary, currently on the rec list. Therein, I tried to forecast what I saw as a real dilemma shaping up, i.e., whether Obama would, as seemed likely, move further to the right once he was in office.
That huge institutional inertia is going to be fighting, and fighting hard, to drown out our voices, and the voices of progressives everywhere, in order to persuade Obama to "compromise" and live up to his campaign promises of "unity" and "bi-partisanship." And, quite frankly, given his record in the early portions of the primary campaign, I'm none too confident that Obama will not allow himself to be swayed by the institutional inertia of D.C.
One thing is absolutely certain: Progressives are going to have to figure out a way to keep the pressure on President Obama, to counter the pressure he's going to receive from the D.C. conservative majority.
Bada, if anyone destroys Obama's Presidency, it will be Obama himself.
Update: Several comments have been along the line that, oh, well, nothing can be done, these things take time, whaddaya gonna do?
As noted in the diary, there has been no discussion from the administration of a public works bill, like the WPA. Paul Krugman has been arguing for massive public stimulus for well over a year.
A public works bill could put millions, even tens of millions, to work in a matter of months; yet no such program has even been proposed, after the administration has held office for more than a year. Krugman addressed this in this blog post in February of this year. My point is this: if unemployment is truly unacceptably high, than public spending would be a way to create millions of jobs, thus addressing the problem. But no such proposal has been made, meaning that these levels of unemployment are acceptable to the administration. Or at least, more acceptable than the alternative, of trying to create jobs through more public spending.
Basically, the stimulus fades out fast starting in fiscal 2011, which starts in October 2010. Yet the consensus view is that unemployment will be around as high as it is now.
The point is that we’re doing a 1937 — or actually worse, since unemployment had in fact fallen dramatically before FDR made his big mistake. Fiscal support for the economy will be pulled away with the economy having barely begun to recover.
The fact that the ARRA was passed in the first place demonstrates that the administration knows that public spending works. They're just not willing to consider it.