Geither’s Loose Lips (Briefly) Sink Dollar Ship (Updated)
My New Atlanticist piece Geithner Dollar Remarks Create Panic” shows how a perfectly reasonable and intellectually defensible comment by a senior official can have an enormous, negative impact.
The video:
The bottom line:
Things perfectly fine for public intellectuals to bandy about often require subtlety and sidestepping by public officials. Diplomats must be diplomatic, presidents must be presidential, and treasury officials must be — well, okay, there’s not a word for it. I suspect, however, that “Geithneresque” will not be the choice if such a word is coined.
Much more at the link.
UPDATE (Dave Schuler)
In partial defense of Secretary Geithner I think it’s interesting to consider the results of his comments in the context of PBoC president Zhou Xiaochuan’s comments on the need for a new international currency, republished from a February speech the other day in both Chinese and English which prompted Secretary Geithner’s observation.
Dr. Zhou’s comments were obviously intended as a shot across the bow. As has been noted here in comments this is poker. We know what’s in our hand, the Chinese know what’s in theirs.
Secretary Geithner shot right back and in reaction the dollar fell (temporarily). That means that the value of China’s dollar holdings declined and Americans, at least for a little while, became even less inclined to purchase goods made in China than they had been before. That isn’t good for China.
I think that Secretary Geithner’s remarks however correct they might be were ill-considered but so was the decision to rehash aggressive statements about the need for a new reserve currency. Our hand is much stronger than it’s being given credit for and China’s much weaker.
It’s so easy to take careless comments the wrong way. I could never be a politician. I can’t stop myself from making weird jokes.
Read your piece at the Atlanticist. but will comment here.
I thought the headline here should have been, “Dollar may eventually be replaced as world’s reserve currency.” This a dog bites man story, as nothing lasts forever. Even house prices fall sometimes.
Why are you not more bothered by the media response? Aren’t you a little tired of politicians spinning and lying? Let us assume that you had a non-partisan and economically literate press. (Fantasy I know) Would you have expected such a reaction? I was off work yesterday, and saw Geithner’s remarks. I was surprised at the media response having heard what he said. Realizing how dumb and how partisan our media is, I should not have been surprised. Jack Nicholson was right.
Steve
Yet another reason we typically don’t elect and shouldn’t appoint intellectuals to public office.
These guys do know they are in charge, right? Just a little leadership tip: When you’re in charge, your every word and action is scrutinized by those affected by your position. This scrutiny intensifies the more obtuse and duplicitous your are perceived to be.
Precision in language and restraint in comment are a leader’s best friends.
All of this is yet another example of how every time this mis-administration opens it’s mouth, the markets tank.
It definitely seems that this administration is fully staffed by political engineers, rather than political bureaucrats.
DOW:
Date Change % Change
03/25/09 90 1.17%
03/24/09 -113.26 -1.46%
03/23/09 496.61 6.82%
03/20/09 -123.93 -1.67%
03/19/09 -88.88 -1.19%
03/18/09 90.88 1.23%
03/17/09 177.7 2.46%
03/16/09 -8.36 -0.12%
03/13/09 4.78 0.07%
03/12/09 237.67 3.43%
03/11/09 7.27 0.11%
03/10/09 379.48 5.80%
You have an odd definition of “tanking”.
James, why does your preview use different formatting than the end result? It’s not much of a preview that way.
OTB should have a pool as to how soon everyone thinks Geithner will lose his job, scapegoated by Obama.
Dr. Schuler, I’d like to think you’re correct about the long game being played, but there’s shockingly little evidence that these players are up to it.
We can always hope. 😉