–Treasury Secretary Timothy Geithner, August 2, 2010
As the ship of the US economy sinks back into the dark, choppy sea of recession, the happy-think band has run out of tunes to play. They made a pretty good run of it, but after more than a year of spinning lighthearted ditties out of a funeral dirge, they are packing up their instruments and waiting for the icy water to close in around them. With the recent slew of economic bad news, most commentators and economists have stopped playing make-believe and are starting to admit that the US economy is flirting dangerously with its second recession in three years.
Meanwhile, Tim Geithner, like the captain who stays alone at the helm, hopelessly spinning the wheel of his doomed vessel, continues insisting that the recovery is on track. Don’t expect any contrition or admission of failure on Geithner’s part. In his disdainfully-titled and shamefully-disconnected New York Times op-ed from exactly one year ago, Geithner performed the economic equivalent of likening radio static to the 1812 Overture, while failing to acknowledge that life continues to get worse for most Americans.
If Geithner was given a chance to reflect on his comments today, you can almost imagine his sniveling response, simultaneously arrogant and inadequate: “After carefully consulting my colleagues, I decided that the situation would have been worse had I not written that op-ed.”
Unlike the fabled captain who goes down with the sinking ship, and very much like his buddies in the world of high finance, Geithner will never personally face the consequences of his own devastating inadequacy and his fealty to orthodoxy. He will soon bolt his high-pressure job in the Obama administration and likely end up back in the finance industry, sailing the world in gold-plated yachts and attending parties where he can freely abuse dwarf people. Perhaps he will be lucky enough to help invent the next absurd new status symbol for today’s ultra-rich.
Geithner is not unique in any of this. His role easily could have been filled (and will be filled after his departure) by countless other men (yes, almost always men), whose training, worldview, and lack of creativity and critical thinking facilities make them a perfect fit for a system in constant need of vacuous social climbers willing to inflict pain on others while simultaneously enriching themselves and the elite they represent. Like a bomb-slinging Tom Brady in his prime, Geithner’s performance of “God’s work,” in the words of banker Lloyd Blankfein, only allows him to dish out the barbs of economic pain, never to actually receive them himself.
So with the happy-think band now silent and Geithner nearly on his way out, let’s look reality in the face. It is not a pretty picture. By any number of measures, the economy has lost its weak grip on recovery and is in for either a period of stagnation or a double-dip recession. As we head into the second half of this year, almost all the major indicators of economic health look terrible: factory orders, the housing market, consumer spending, unemployment, and more. Recent GDP numbers that were just released show that the original recession of 2008-2009 was much deeper than originally thought and that growth in the first half of this year was almost zero.
Meanwhile, Europe is staggering towards economic abyss. Even the Chinese economy, the only engine of growth in the world economy in recent years, has been slowing and cannot provide the sort of boost needed to restore growth in any meaningful way.
And now we are left chomping on, in the eloquent words of US Rep. Emanuel Cleaver, a “Satan sandwich.” The US government has passed a debt deal that will drive a stake into the heart of what little remains of the US social safety net. As this deal goes into effect, the country will never be the same. We are on the verge of an epochal shift, a wholesale gutting of the services our society provides to its poorest and most vulnerable. If you thought we were experiencing a social crisis before this deal passed, things are going to get much worse.
As many commentators have pointed out, the short term effect of this deal will almost certainly depress the economy further. It will also exacerbate the US wealth disparity, which has grown to banana republic-like proportions. The recent report on this is worth describing: it shows the wealth gap between white households and black and latino households widening to record levels, at the same time as the wealth gap within racial groups widened. In other words, the economic impact of racism is sharpening, and the rich–no matter what the color of their skin–just keep getting richer.
In the midst of this dystopic economic landscape, capitalism gropes in the dark towards the only solution it knows for economic crises: destruction of excess value that is clogging the economy. Reports show that banks are now starting to demolish foreclosed homes they have on their books that are simply too much trouble for them to sell. This is something that I predicted would happen a couple years ago, because it is simply the logical move for a capitalist economy suffering from a glut of housing stock. But it is still unsettles me to see it actually happen.
And so here we have an economic system that’s proclaimed as the “most efficient social system for the production and distribution of essential goods” destroying houses while homelessness increases. I have learned that no matter how twisted it gets, this way of doing things will still have its defenders–those who either can’t or won’t acknowledge the possibility of replacing this sick system with something better. It’s Tim Geithner on a grand scale: “Welcome to Capitalism.”