In today's WSJournal, James Freeman reviews Tim Geithner's new book, "Stress Test." I find Freeman's review interesting and not surprising.
First, Freeman establishes what has long been obvious. Geithner knew virtually nothing about economics when he was thrust into the spotlight as a career bureaucrat. In fact, by his own admission, Geithner had little or no interest in economics as a student and did not find his sole economics course of any interest. That fits.
Second, from his post as chief (Federal Reserve) regulator of Citibank, before the crisis, Geithner saw no problems developing and was comfortable with bank risk levels. After the collapse of Bear Stearns, Geithner testified (this is not in his book) that the economy was not at risk. So, Geithner confirms what we all knew at the time. Geithner was asleep at the switch.
But, when the crisis hit, what was Geithner's answer: blow up the taxpayer to defend bank bond holders. That policy, according to Geithner "saved" the American economy. Or did it? How would Geithner possible know?
Tragically, folks like Geithner, largely untutored in economics, made major decisions about the future of the US. The results are now obvious for all to see.
Geithner's actions, along with Congressional blunders and Obama Administration overregulation and hostility, have reduced the American economy to a shadow of itself.
What did they save exactly?