Is Geithner right that the recession is receding?
Remember Tim Geithner? He's that deer-in-the-headlights fellow in charge of the Treasury Department, who now claims that the recession is receding. His audience for this piece of content-free cheer-leading are our good friends in Saudi Arabia who grant us their oil and terrorists in exchange for our dollars. And the Saudis need reassuring because they are investing their oil profits in dollar-denominated assets that keep tumbling in value.
And why shouldn't they tumble? The U.S. has thrown in $12.8 trillion to rescue the global banking system from its risk-seeking greed-heads. And our $787 billion stimulus plan has officially saved or created 21,000 jobs -- a spit glob in the ocean of the 6.5 million jobs lost since the recession began. All that added debt just makes the dollar look more wobbly.
And that government debt doesn't even take into account the efforts of traders at firms like Goldman Sachs Group (GS), who will pay themselves near-record bonuses this year by profiting from trades like shorting the dollar and buying oil -- even as they use billions in low-cost government loans to feed their profit machine. Does Goldman hate America or is Geithner just fronting for Goldman to placate the Saudis?
Unfortunately, it is hard to find any evidence in Geithner's speech that the recession really is receding. And with the latest concerns about the economic impact of a possible bankruptcy of CIT Group (CIT), it is clear that hundreds of thousands of businesses in the U.S. could face a cut off of short-term financing unless the U.S. steps in.
So the argument that somehow things are getting worse at a slower rate is beginning to look a bit hollow. The question is whether the Treasury Secretary can restore confidence by making hollow pronouncements at odds with reality or whether people are smarter than that -- and will draw confidence from candor, evidence, and measurable, sustainable improvement.
If Geithner believes in the latter, he is not showing it.
Peter Cohan is president ofPeter S. Cohan & Associates. He also teaches management at Babson College. His eighth book isYou Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.