Geithner tells Congress: calling China names doesn’t get you anywhere
U.S. lawmakers are mad and want Treasury Secretary Timothy Geithner to step in and call China a name – ”currency manipulator” — which may not sound like much on city streets but can be quite an insult in world financial circles.
“At a time when the U.S. economy is trying to pick itself up off the ground, China’s currency manipulation is like a boot to the throat of our recovery. This administration refuses to try and take that boot off our neck.” That’s not a Republican raging against President Barack Obama’s Treasury Secretary, it’s Senator Charles Schumer, a Democrat from New York (where Wall Street happens to be located).
“Mr. Secretary, although there may be some modest disagreement about what to do, I’m increasingly coming to the view that the only person in this room who believes that China is not manipulating its currency is you,” Schumer said.
The New York senator, never one to hold back when it comes to words, let loose on Geithner at a Senate Banking Committee hearing on China’s exchange rate policies which are a source of friction with the United States.
“What is the administration so afraid of? You know we are right. You know the United States is put at a terrible disadvantage and you refuse to act. What are you afraid of?” Schumer bellowed.
They were about the loudest fireworks to emerge from a hearing that was fairly drama-free given the controversial subject matter. Especially since Geithner has come under general fire from Republicans and other Obama critics over the struggling economy with some even calling for his ouster.
It is within the powers of the Treasury Department to declare China a “currency manipulator” in its next foreign exchange report due on Oct. 15 — which is what lawmakers want. But Geithner, without tipping his hand on what the semi-annual report would conclude about China’s currency tactics, said it really wouldn’t accomplish anything to pin such a label on Beijing.
Washington Extra – I see your gauntlet, and raise you a gauntlet
On Friday, President Barack Obama threw down the gauntlet to Republicans on taxes, effectively daring them to vote against a tax cut for the middle classes, just so that they can give an average of $100,000 in tax cuts to millionaires.
Over the weekend, Republican leader of the House John Boehner seemed to shirk the challenge, but on Monday, Senate minority leader Mitch McConnell picked up the gauntlet and threw it right back. McConnell has promised to introduce legislation “today” to ensure that “no one in this country pays higher income taxes next year than they are right now.” There are no Republicans who support a tax hike, he said, effectively daring Democrats to vote for higher taxes when the economy is in the mire.
Washington Extra is not sure who will blink first. But whichever side you take in this debate, one thing is for sure: this “wrestling match,” as Obama called it, or game of high-stakes political poker if you prefer, does the economy no good at all.
Another big story bubbling up this week is a series of hearings on the Hill over China’s currency and trade policies, with Treasury Secretary Tim Geithner among those scheduled to appear. We are told that 93 lawmakers in the House have signed a letter urging Democratic leaders to get tough with China over its exchange rate practices. This looks from the outside more like political posturing than any real threat that legislation will be passed this year, but Beijing will be watching closely. The yuan has risen less than one percent since its currency peg was eased ahead of the G20 summit in June, but that appreciation has quickened in recent days, in what might be an attempt to dampen congressional anger.
Here are our top stories from today…
Senate Republicans firm on tax cuts for rich
Let me ask a question regarding President Obama’s tax cut to the middle class, by phasing out the Bush tax cuts to the rich. Which group – the middle class or the rich – will recycle the majority of the funds received back into the economy, and therefore provides a greatly needed boost to economic activity?
I put it to you that in the present economic climate the people controlling and holding the wealth are not actively investing, rather there are looking to indicators of continued and robust economic growth before once again investing in equities. It therefore follows suit, they will simply sit on the tax cuts if extended.
If however the rich are able to put the fear of double dip recession behind them will look to shore up their investment portfolios, whereas the stimulus however packaged need be directed to the consumption of goods and services.
It is by directing the tax cuts to the middle class one drives the consumption of goods and services, with the added addition of working to the benefit of the rich as economic activity and therefore asset prices increase, fuelled by the uptick in consumption.
It was just a game of golf!
Ever since he played golf with President Barack Obama last week, New York newspapers have been rife with speculation that Mayor Michael Bloomberg is being wooed by the administration to replace Timothy Geithner as Treasury Secretary.
The White House dismissed the speculation as fantasy and Bloomberg dismissed the idea. But still as summer draws to an end, what else is there to talk about going into the Labor Day holiday weekend except the lackluster U.S. economy?
More bad news for Obama on Friday with the unemployment rate rising to 9.6 percent. The economy is not creating jobs fast enough to reduce the unemployment rate and give Democrats more comfort going into the Nov. 2 congressional elections with their majority in Congress at stake.
Some pundits suggest the gossip may be less about Bloomberg, who is serving a hard fought third term as mayor, and more about Geithner, who has come under fire from both the right and the left about his advice to Obama on the economy and the role he played in the 2008 government rescue of Wall Street.
As White House economic adviser Christina Romer leaves her post on Friday, following the departure of Peter Orszag as head of the Office of Management and Budget at the end of July, Obama so far is standing by his treasury secretary.
Would he really want to follow the advice of House Republican Leader John Boehner and fire Geithner and his National Economic Council Chairman Larry Summers just before an election that could put Republicans in charge of the House of Representatives?
Besides, some of the sourcing on the raft of speculation about Bloomberg has been thin as noted by a New York Magazine item pointing to a source used by another publication as ”one Democrat, who may or may not be the mayor’s hairstylist.”
from Summit Notebook:
The Geithner approach: make the best of bad choices
Ever wonder how the U.S. Treasury Secretary gets through some of the most economically stressful times this country has seen in a while -- does he go for long runs? Sleep two hours a night?
Timothy Geithner has been in the job less than a year, and came in after the economy had slumped into recession. Now unemployment is approaching 10 percent, he's had to navigate through an economic stimulus package, and on top of all that the weakness of the U.S. dollar has other countries questioning whether it should still be the reserve currency.
Enough problems, we imagine, to give anyone a big giant headache and more than a few sleepless nights.
So what does Geithner do under the weight of it all?
"I've been in the middle of this for quite a long time," he said in an interview at the Reuters Washington Summit on Tuesday. (Remember, before this job, Geithner was president of the New York Federal Reserve Bank).
His general approach, Geithner said, is to "focus on trying to make sure you're making the best of a bunch of bad choices."
And to make sure "you are helping the president make sensible decisions," he said.
U.S. senator seeks details of Geithner’s ‘colorful language,’ gets nowhere
U.S. Senator Jim Bunning asked a Treasury Department official the question other lawmakers had avoided at a banking committee hearing on Wednesday — so, what about that profanity-laced tirade by Treasury Secretary Timothy Geithner?
Assistant Treasury Secretary Michael Barr, on hand to testify about credit rating agencies, played down the drama of Geithner’s widely reported “conversation” on Friday with regulators who were refusing to toe the Obama administration’s financial reform line.
Barr said he attended the meeting in question, where sources said Geithner used expletives in urging cooperation from Federal Reserve Chairman Ben Bernanke and others.
“The secretary made clear the regulators are free to defend their own agency prerogatives. They’re independent agencies … We had a long discussion about macro-prudential versus micro-prudential regulation, the kind of conversation that we have had with them on many occasions,” Barr said. But Bunning, a Kentucky Republican known for his bluntness, wasn’t buying this bland description of a closed-door session that sources described as tense and uncomfortable. Under pressure from Bunning, Barr replied, “I won’t characterize the exact verbiage that was used … senator, you will not be surprised to learn that in Treasury, as occassionally up on the Hill, there’s some colorful language.”
Said Bunning, “I’ve been accused of that. I understand.”
from Ask...:
Withdraw or stand their ground?
Tom Daschle doesn’t want to be a distraction. Nancy Killefer doesn’t want to be a distraction. Timothy Geithner has already been a distraction.
What these three high-profile nominees to President Obama’s White House have in common, besides not wanting to be distractions, is that they apparently don’t know how to do their taxes. Daschle, the former senator and Obama’s choice for health secretary, and Killefer, a former assistant Treasury secretary and nominee to oversee the government’s budget, have withdrawn their nominations because of tax indiscretions. Geithner has been confirmed but his path to the top of Treasury was also marred by tax troubles that some fear may come back to haunt him.
Besides begging the question why do smart people not know how to do their taxes, it also throws a shadow over Obama’s quest to have a fast, smooth transition to power.
The real question is whether nominees should withdraw their nominations when tax troubles surface. If the transgression isn’t enough to throw them in jail, why should they lose the opportunity to serve in the White House?
What’s Next For Paulson, A Soup Line?
Not likely. But Treasury Secretary Hank Paulson might want to dust off his resume because if the Academy of Management is right, he’s probably not going to be getting many fat offers to serve on corporate boards after leaving government in January.With Democrats in control of both Congress and the White House starting Jan. 20, high-ranking Republicans in the outgoing Bush administration will be less marketable for boardrooms positions, according to the association.”If a party is shut out of both congressional houses plus the executive branch, as Republicans will be, its members’ chance of joining the board of a large corporation is about 30 percent less than it would otherwise be,” said Richard Lester of Texas A&M University, who carried out a study for the Academy of Management.Helping Paulson and several of his White House colleagues, though, is that Cabinet members are the most likely among retiring governmental officials to be recruited to serve on corporate boards.”They were more than twice as likely as former senators, and more than five times as likely as former representatives, to be appointed corporate directors during the 16 years covered by the research — 1988 through 2003,” according to the association.Not to pick on Paulson — there are more than a dozen Cabinet members — but he has become one of the highest-profile, most controversial of Bush’s aides for the way he has been handling the $700 billion financial industry bailout.But Paulson’s a survivor. This former Nixon administration official left government the first time around in 1973 (like a lot of his colleagues) and quickly worked his way up the ladder at investment firm Goldman Sachs, finally serving as chairman and CEO when he got his Treasury job.Photo credit: Reuters/Larry Downing (U.S Treasury Secretary Paulson with President Bush outside Treasury Building in Washington)
Once upon a time in a village, a man appeared andannounced to the villagers that he would buy monkeys for $10 each.The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort.He further announced that he would now buy at $20.This renewed the efforts of the villagers and they started catching monkeys again.Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!The man now announced that he would buy monkeys at $50.However, since he had to go to the city on some business, his assistant would now buy on his behalf. In the absence of the man, the assistant told the villagers. “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.”The villagers rounded up all their savings and bought all the monkeys.Then they never saw the man nor his assistant again, onlymonkeys everywhere!Now you have a better understanding of how the stockmarket works!
Presidential hopefuls like Buffett for Treasury Secretary
While White House hopefuls Republican John McCain and Democrat Barack Obama wasted no time trading barbs in their second presidential debate, they agreed on the one man they would like to see running their Treasury Department to help pull the U.S. economy out of a tailspin: investment guru Warren Buffett.
“A supporter of Senator Obama’s is Warren Buffett. He has already weighed in and helped stabilize some of the difficulties in the markets and with companies and corporations, institutions today,” McCain said.
“I like Meg Whitman, she knows what it’s like to be out there in the marketplace. She knows how to create jobs. Meg Whitman was CEO of a company that started with 12 people,” McCain said, referring to one of his own economic advisers who used to run online auction giant eBay.
“Warren would be a pretty good choice — Warren Buffett, and I’m pleased to have his support,” Obama said. “But there are other folks out there.”
Who would voters like to see running the Treasury Department under the next administration and working to fix the economy?
Click here for more Reuters 2008 campaign coverage
- Photo credit: Reuters/Jim Young
I think Buffett would do a great job in this position, but I doubt he would take it if it were offered to him. He’s not used to being employed/working for someone else..and I don’t think he’s masochistic enough to go from being completely independent and self-directing to being one part of a huge bureaucracy, where even ideas that don’t meet with opposition are very, very slow to be adopted and implemented.
Dr. Tantillo, who has ( http://blog.marketingdoctor.tv ) did a post a little over a week ago on Buffett (in a winner/loser post that contrasted him with WaMu).
Dr. Tantillo blogs from a branding perspective, and posits that any company must stay true to its brand’s ‘core features’ to succeed.
Full post: http://blog.marketingdoctor.tv/2008/09/2 6/brand-advisory-buffett-and-wamu.aspx
I think that working for someone else is not part of Buffett’s brand….
Musing with McCain: ‘If I were dictator…’
WASHINGTON – Sometimes it’s hard to tell when John McCain is joking. Take his interview Tuesday with journalists at The Des Moines Register. The Republican presidential candidate acknowledged the financial bailout measure before Congress was not perfect, but he said it was unacceptable to do nothing and admonished lawmakers for failing to pass a rescue plan. Then, without cracking a smile or missing a beat, he added this little nugget: “I’m not saying this is the perfect answer. If I were dictator, which I always aspire to be, I would write it … a little bit differently.” With the Treasury secretary likely to have a huge amount of power under any bailout scheme, McCain was asked what sort of person he was looking for to fill that job. He said Treasury Secretary Henry Paulson had been doing admirably. “I think a person along Paulson’s lines,” McCain said. Given the fragility of Wall Street, he added, any candidate “probably has to have a sound grounding in the financial markets and that aspect of America’s economy.” The Arizona senator said if elected he would recruit the brightest and the best for his Cabinet, Democrat or Republican, in government or in business. “I’ll go out and ask them to serve the country for a dollar a year,” he said. He mused aloud about who might be enticed into government service: billionaire Iowa businessman Warren Buffett, eBay founder Meg Whitman, or Fed-Ex chief Fred Smith.
McCain strongly objected when a questioner suggested his running mate, Sarah Palin, was not as experienced as others he named as potential government servants. “She’s been a mayor. She’s been an overseer of billions — I don’t know how many billions of dollars of natural resources. She’s been a member of the PTA (Parent Teacher Association). She’s been a governor,” McCain said. He express skepticism when told many people, including now some conservative Republicans, questioned her level of experience. “Really? I haven’t detected that,” he said. “Now, if there’s a Georgetown cocktail party person who quote calls himself a conservative and doesn’t like her, good luck, good luck, fine,” McCain added. “I think that the American people have overwhelmingly shown their approval. Are there people who will be detractors of her? That’s fine. That’s fine. That’s what politics is all about.”
Click here for more Reuters 2008 campaign coverage.
Photo credit: Reuters/Brian Snyder (McCain speaks at Truman Presidential Library in Independence, Missouri, on Wednesday)
And speaking of dictating, don’t forget what Obama said at the presidential debate:
when McCain confronted the nation once again at the presidential debate about the earmark and pork barrel project spending problem and vowed to continue working to end earmark spending in Washington. Obama responded by admitting earmarks were a problem but Obama’s response implied that his solution to earmarks is not to stop the process but that as he explicitly stated, he (Obama) will go through final legislation and weed out what he decides is wise to spend money and what is not. Instead of fixing the system and allowing votes on government financing as individual legislation, Obama said HE will decide. Not the people, not the representatives of the people. Obama said he will decide. Those are the words of a dictator.
Apparently, the Chinese have learned from the economic failures of socialism, while the US Congress has learned nothing.