First, let me put out there that I understand the difficulties of public service. You work your butt off. All your friends make more money than you. Everybody criticizes you at every turn. It's hard work and it takes a strong person to do it. Generally speaking, I'm grateful for the talented people who devote themselves to public service despite all the reasons not to.
Now that he's resigning, though, Geithner is trying very hard to spin his actions during the bailout. That's really all he'll ever truly be remembered for. Try as I might, I just can't ever really forgive Tim Geithner. As far as I'm concerned, he and Hank Paulson ended America.
The bailout was my Watergate moment. The moment when I lost all faith in my government and questioned whether America was actually a place worth living in. The biggest difference, of course, is that the evildoers in Watergate were punished. The bailout? It ensured that the evildoers were manifestly rewarded.
Geithner makes a valid point when he says that relative to other responses to economic calamities ours was pretty good. I do agree that things could be worse today if not for the actions that were taken.
People have a valid point when they say, "Look, something had to be done. The entire economy was going down."
Yes, something had to be done, and what was done was largely effective. But it was the wrong thing to do. It also wasn't the only thing we could have done. It could have been done the right way. It could have been done in a way that didn't destroy America.
To recap: a bunch of financial institutions made record profits by placing risky bets that placed the global economy in jeopardy. The bets eventually went the wrong way. The global economy was in jeopardy.
Now, the response that is most reprehensible is the one by the Bush Administration. Essentially, they said that the US was going to borrow all the money in the known universe and give it to the banks, with no strings attached. Period. Full stop. That was it.
At every point along the way, they argued that if we didn't give the banks every penny available to the human race, the economy would collapse.
At every point along the way, though, people brought up the valid, commonsense arguments that if we were going to do this, that there should be limits on compensation because... well... you really shouldn't get a bonus when your company was so reckless they almost destroyed the global economy.
At every point along the way, Geithner and Paulson said that if you attach any conditions to the mountains of money, the Wall Street banksters wouldn't take it. I really wish I were these guys' kid because they have to be the only clowns in the universe dense enough to fall for the old, "I'm going to hold my breath until I pass out unless I get a pony" trick.
So, the banksters got their mountains of cash. Immediately used it to pay themselves bonuses and make themselves bigger than "too big to fail" and everybody was outraged. The outrage part happened largely because the banks did nothing to help out main street. They used the money to help themselves and nothing else.
Now, Geithner is saying that there was nothing he could do. The Bush Administration had already decided that the best path was to make sure Wall Street was rewarded for being the worst businessmen in the history of commerce. It was too late once Obama took office to do anything that might tangentially be regarded as fair or just.
Trouble is, Giethner was head of the NY Fed at the time the Bush Administration was in the business of maximizing the rewards for failure and greed. He was involved in all those conversations and at every step along the way, he argued to maximize Wall Street rewards.
The end result? Government action resulted in Wall Street never missing a bonus. Main Street might recover in 10 or 20 years. It's hard for me to agree that Tim Geithner helped America. He helped Wall Street. America has been left to rot.
The fundamental unfairness of this is inescapable. We are supposed to be a free market economy. Only the bad guys have governments who chose winners and losers. The day our government decided that only Wall Street was allowed to win and that the rest of the country had to lose, a part of America died for me. It really did. It simply laid bare the reality that if you're rich, the government will set up rules to make sure you can take advantage of anybody who isn't rich. If you over-reach and screw up big time, the government will step in and simply hand you mountains of money so you can go back to subtle subjugation of the masses.
I still wave the flat harder than almost anybody I know. I've raised my hand to defend this country twice. One of those times was during a time of two wars. (I have not, for reasons unknown to me, been called up for either Iraq or Afghanistan, but I salute those who were.) There's enough good in this country that I can't imagine living anywhere else. However, the part of me that believed we lived in a fair economic system died with the bailouts.
I now have no illusions. Small business people like I was, do not matter. Our businesses can fail due to a bad economy and that's just not a problem. We lose our homes, while the banks that held the notes get bailed out. We struggle to find work while the very villains who gambled with the world economy and decimated it continue to get 7 and 8 figure bonuses.
Meanwhile the thieves on Wall Street make record profits by borrowing money from the Fed at 0% and lend it back to the government at 3%.
Wall Street never missed a beat. But maybe 10 or 20 years after the "rescue", main street will be back. If it ever does come back, it won't be because anybody lifted a finger to help.
A part of America died when we decided that only poor people need to suffer the negative consequences of capitalism.
Tim Geithner made sure of that.
We could have put in compensation limits. No bonuses or raises for a period of time for any bailed-out firm. We could have wiped out the shareholders. We could have fired the executives. We could have replaced the boards.
We didn't, and that was a conscious choice: a choice to make sure that we rewarded evil as much as humanly possible.
Main Street? Eh... what's good for General Bullmoose is good for the USA. 10 or 20 years from now, they be okay, but really, who cares?
Geithner's own words sum up the problem better than I ever could:
"(wall street bankers) ‘Those are the people that got us in the mess; you saved them and they paid themselves billions in bonuses, and they should have gone to jail, and they are still walking around.’ I don’t know anything powerful enough to overwhelm that simple narrative.”
It's not that we don't understand. It's that when you do something that is completely wrong, even if for a good reason, it's hard to spin it later, regardless of your motivations.
