I’m beginning to think Tim Geithner and Alan Garcia are drinking the same Kool-Aid. In the news today:
Geithner sees ‘durable’ signs of stability “Probably why I’m doing this (tour) is to make sure we keep working with governments around the world to continue to provide enough support to lift this global economy back to a sustained pattern of growth,” he told reporters.
And in other news:
- Foreclosures rise 15 percent in first half of 2009
- Rising unemployment accelerates foreclosure crisis
- Lawmakers frustrated with foreclosure aid programs.
Geithner’s rhetoric is like that of Alan Garcia, who keeps claiming Peru is on track for strong GDP growth and has an iron-clad, recession-proof economy. The numbers, souped up to begin with, show otherwise (courtesy IKN) :
The root of the problem in the US, put simply, is that people bought houses they couldn’t afford. Without steep wage inflation, the foreclosure crisis and falling home prices may continue for some time (see Japan). For all the monetary easing (printing money) Geithner et al are doing, the only thing that achieves is to temporarily prop up the feeble balance sheets of overleveraged banks.
Tim Geithner and Alan Garcia both use optimistic rhetoric to appease the general public but sadly their policies serve rich old guys in suits before the general public.