Normally, I do not react to propaganda statements from the Secretary of the Treasury. But the lies and distortions asserted by Timothy Geitner yesterday deserve a rebuttal.
Treasury Secretary Tim Geithner reiterated and defended the "strong-dollar" policy following a speech Tuesday at the Council on Foreign Relations in New York.
"Our policy has been and will always be, as long, at least, as I'm in this job, that a strong dollar is in our interest as a country," Geithner said in response to a question. "And we will never embrace a strategy of trying to weaken our currency to gain economic advantage at the expense of our trading partners"...
Unbowed by the dollar's recent weakness — it hit its lowest level since August 2008 Tuesday -- or record-setting gold and silver prices, Geithner reiterated a now familiar theme among policymakers: The dollar's strength during the "darkest moments" of the crisis is "very encouraging," he said, and shows investors "retain fundamental confidence in the ability of the U.S. to manage" its long-term budget issues.
This is the Orwellian Lie, the Big Brother Lie, a Whopper. A "strong-dollar" policy? The very opposite is the truth. I wrote about the perils of the declining dollar only two days ago in The Dollar? We've Got That Sinking Feeling... And when I wrote that, I was late to the party. Many others have talked about the dollar's precipitous decline lately.
China has no choice but to let the Yuan appreciate to fend off the massive inflation they would face—and are facing—if they peg the RMB to the dollar. If that's not embracing a strategy of weakening our currency to gain economic advantage at the expense of our trading partners, I don't know what is. Combined with the Fed's QE2 and ZIRP (zero-interest rate policy), this is tantamount to a war on Asian exporters.
But it gets worse, if you can believe that.
Oil prices at current levels will not derail the global economic recovery, U.S. Treasury Secretary Timothy Geithner said Tuesday.
"At current levels, on its own, it won't put the recovery at risk," Geithner told an event sponsored by the Council on Foreign Relations when asked to rate oil prices as a global risk.
And that's all he said. Is that because Timmy is an expert on relationship between oil prices and recessions? Knows the literature? Knows about the "6% rule" when it comes to energy expenditures and household spending?
The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession, according to Craig Johnson, president of Customer Growth Partners. Johnson looks at the percentage of income consumers are spending on gasoline and food as a way of gauging how consumers will fare when energy prices spike.
With gas prices now standing at about $3.90 a gallon, energy costs have now passed 6 percent of spending—a level that Johnson says is a "tipping point" for consumers...
Of the six US recessions since 1970, all but the "9-11 year 2001 recession" have been linked to—if not triggered by—energy prices that crossed the 6 percent of personal consumption expenditures, he said. (During the shallow 2001 recession, energy prices had risen to about 5 percent of spending, which is higher than the long-term 4 percent share)...
What may make matters worse this time around, is there has been a steep increase in food prices that occurred as well. In other recent recessions food costs were benign, at between 7.5 percent and 7.8 percent of spending.This year food prices have climbed 6.5 percent since the beginning of early January, according to Consumer Growth Partners.
"The combined increase in the necessities of food and energy creates a harsh double whammy for already stressed consumers," Johnson said. The last time this happened was in the recession that lasted from 1973 to 1975.
Johnson estimates that food and energy eat up about 15 percent of consumer spending at today's prices, compared with about 12.7 percent two years ago.
Timmy knows diddly-squat about the effects of high oil prices on household spending. I'm pretty much convinced The Geithner know diddly-squats about anything that might be of concern to ordinary Americans. Thank you for The Change, Barack Obama!
What Tim Geithner knows diddly squat about that he did discuss is not as important as what Tim Geithner knows diddly squat about that he didn't discuss. And what he didn't discuss was the Housing Market, which is looking for a new bottom. The question of the day is Will US Economy Follow Housing Into a Double-Dip?
Falling home prices may threaten the economic recovery.
Home prices have been falling in many markets for several months. The most recent data from Case-Shiller show that home prices declined in every one of the 20 cities included in their index—except Detroit.
This will very likely mean that consumer spending will contract, perhaps resulting in a much more sluggish economy and more unemployment.
The connection between falling home prices and consumer spending is abundantly clear. Just last month, Karl Case, Robert Shiller and John Quigley published a study that looked at housing markets and consumption over 31 years. They found that “variations in housing market wealth have important effects on consumption.” (And, yes, the first two authors are the "Case-Shiller" guys.)
Specifically, they found that there’s a “wealth effect” from housing.
When home prices rise, consumption rises, as well. When they fall, consumption falls. What’s more, this wealth effect is even more strongly pronounced for falling prices than it is for rising prices.
Apparently, fear is a greater motivator on the savings side than joy is on the spending side.
From Calculated Risk's Case Shiller: Home Prices near post-bubble lows in February
As the clueless Secretary of the Treasury reassures us that all is well, the risks of another recession brought on by high oil prices, high food prices, and falling housing prices grow ever-larger.
When did the government become the enemy? When did it become necessary for small-time bloggers to deconstruct the lies of high—I don't mean stoned—government officials? Isn't it bad enough that we have to fend off the blood-sucking vampires on Wall Street? Its doubly bad when they are in cahoots with the mediocrities in Washington, and are very often exactly the same mediocrities. (Geithner was head of the New York Fed.) When did serving the public come to mean screwing the public?
The answer to these questions is lost in the sweep of time. The integrity of our government disappeared slowly over several decades. A lie here, another lie there, a few more bricks in the wall. Timmy Geithner knows diddly-squat, but he doesn't need to know anything. Serving the public is not his job. His job is to defend the bankers and the President he works for.
What's the old expression? With friends like this, who needs enemies?
"When did the government become the enemy?"
Answer: December 2000. America had been headed in this direction for decades, but the Bush Vs. Gore judicial coup d'etat was the final nail in the coffin. Five Republica appointee justices overturned the popular mandate that had elected Gore by half a million votes and the reaction among the public was: crickets. Not that Gore would have been a great President or even a very good one, but after those events the elites knew that they had dumbed the discoure down to the point where they no longer had to fear the wrath of the masses and could proceed with their agenda more or less openly.
Posted by: Bill Hicks | 04/27/2011 at 01:04 PM