Remember when the Obama administration and its allies in Congress urged the confirmation of Tim Geithner despite his tax problems? They claimed that Geithner was “uniquely qualified” to lead the nation out of an economic collapse, and that no other candidate could possibly replace Geithner. Former Australian prime minister Paul Keating must have thought the Democrats and American media had discovered a completely different Tim Geithner than the one he knew:
If anyone in the US media had thought to ask a former Australian prime minister for his assessment, they would have heard a different view. And they would not have been so surprised at Geithner’s performance since.
In a speech to a closed gathering at the Lowy Institute in Sydney on Thursday, Paul Keating gave a starkly different account of Geithner’s record in handling the Asian crisis: “Tim Geithner was the Treasury line officer who wrote the IMF [International Monetary Fund] program for Indonesia in 1997-98, which was to apply current account solutions to a capital account crisis.”
In other words, Geithner fundamentally misdiagnosed the problem. And his misdiagnosis led to a dreadfully wrong prescription.
In fact, Geithner bungled the job so badly that Asian nations still refuse to “stick their head in the IMF noose,” as Keating puts it. Despite 7% compound growth over several years afterwards, Indonesia still couldn’t get itself out of the hole Geithner dug for them. Soeharto lost power, and countries like China paid attention. Instead of working more cooperatively, China built up big reserves instead, creating a debt imbalance that helped make the current financial crisis much worse than it might have been.
Geithner’s performance since his confirmation hasn’t surprised Keating at all. The dithering on bank issues has left the US with few realistic options outside of nationalization on some scale. The vacillation and fumbled rollouts of economic policy have left the markets with no confidence at all in his leadership, leading to a flight from capital investment clearly shown in the stock market performance of the last few weeks. Keating understands that lack of confidence from his own experiences with Geithner, but the US has just begun to figure out Geithner’s incompetence.
That sound you hear from down under? Laughter at the gullibility of Congress and the media in buying the argument that a man who couldn’t figure out his own taxes had the only qualifications for handling American economic policy. Our mainstream media never reported on this botch-up until it was far too late to do anything about it.
Update: Jen Rubin apologizes to Geithner for not realizing he was a boob instead of a cheat.