G20 Summit: Welcoming the failure of the economic recovery team(Read article summary)
Are Obama and his economic team rebuilding the system that got us where we are today and selling it to the world?
Lefteris Pitarakis/AP Photo
Waterford, Ireland ā The latest from the G20 meeting in Toronto. As you recall, the meeting was billed as a showdown between the Germans and the Americansā¦that is, between the deficit cutters and the big spendersā¦
That is, between the people without a hope and the people without a clue.
TORONTO (AP) ā World leaders must work together to make sure the global recovery stays on track, Treasury Secretary Timothy Geithner said Saturday.
Geithner made his remarks as President Barack Obama has warned his counterparts from the Group of 20 nations to not reel in measures to stimulate their economies too quickly. The United States fears doing so could endanger the global recovery.
Asked if the global economy could slip back into another ādouble dipā recession, Geithner said the answer to that question hinges on decisions made by world leaders. āIt is within the capacity of the people who are going to be in those rooms together in the next few days to avoid that outcome,ā he said.
āIf the world economy is to expand at its potential, if growth is going to be sustainable in the future, then we need to act together to strengthen the recovery and finish the job of repairing the damage of the crisis.ā
As near as we can tell, the recovery has been on the wrong road since it started its motor. And the folks in Toronto couldnāt put it āback on track,ā even if they knew what they were doing. All they can do is get out of the way.
The system has too much debt. It needs to get rid of some of that debt ā by write offs, defaults, and pay downs. Things that must happen, must happen sooner or later. Better sooner than later.
But what IS happening now?
World trade is breaking down ā the Baltic Dry index, a measure of world trade, recently fell 17 days in a row.
Consumer spending is breaking down ā the āconsumer discretionaryā sector has turned ominously negative.
Stocks are breaking down ā the Dow fell 9 points on Fridayā¦145 points the day beforeā¦.
Employment is breaking down ā you know the story.
Housing is breaking down ā not since 1963 have people bought so few new houses.
Does this sound like a recovery? Of course not.
What it sounds like is a defeat. A failure for the recovery team.
But donāt worry, boys, sometimes failure is the best you can hope for. And come to think of itā¦defeat is not so bad. Think how much better off the Chinese would have been if Maoās long march had ended in the total collapse of his army. And suppose George W. Bush hadnāt been such a total failure? People might not have elected Barack Obama. And what if the invention of the television had never caught on? Americans might still have some dignity and brainsā¦.
Not only do collapse and failure help prevent bigger mistakes, they also correct mistakes after youāve made them. Running up debt equal to 362% of global GDP was probably not the smartest thing the human race ever did. Trying to ārecoverā the economy and reproduce the system that produced those debts is even dumber.
Instead, letās have a good old fashioned correctionā¦a collapseā¦a failure of the Geithner, Bernanke, Obama team. Weāre going to have it anyways. Bring it on. Get it over with!
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