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Which Way Is Up?: Geithner Calls for Weaker and Stronger Dollar, and the NYT Doesn't Notice
During his Senate testimony Tim Geithner said he supported a strong dollar. He also complained that China was "manipulating" its currency by keeping its value down against the dollar. (China has a public exchange rate target, so its not clear how this can be called "manipulation." It is a fixed exchange rate.)
The complaint against China implies that Geithner wants a lower-valued dollar which is directly opposite to wanting a strong dollar. As a practical matter, this is about as embarrassing a contradiction on a key policy issue as a Treasury secretary designate can possibly make, but the contradiction completely escaped the notice of the NYT.
The article also asserts that: "Mr. Paulson initiated a round of strategic talks with the Chinese and, on his watch, the Chinese allowed the yuan to depreciate nearly 20 percent." Actually, the Chinese allowed the yuan to appreciate by nearly 20 percent.
--Dean Baker
COMMENTS (4)
From what I've read on this matter, it seems that it's Obama accusing the Chinese of currency manipulation and not Geithner.
It's situations like these in which you may want to consider giving someone the occasional benefit of the doubt, lest you end up looking foolish. By my estimation, Mr. Geithner hasn't been on the job long enough to recieve his first pay check. You should wait and see for him to actually do something before engaging in such trivial "gotchas".
Posted by: DRR | January 23, 2009 5:18 AM
Actually, Geithner is not even on the job. Also, as this blog is titled "Beat the Press" for a reason, I think Dean was critiquing the mindlessness of the reporter and his editor for just taking dictation on Geithner's testimony and not 1) not recognizing the contradiction between the "strong dollar," and an undervalued Reminbi/Yuan 2) for making a major factual error about the Yuan's appreciation against the dollar over the last 3 years (although in the last few months the Chinese have intervened to stop and perhaps reverse that trend as their exports slump).
I do feel some sympathy for any administration since the political feel good default statement is "we want to maintain a strong dollar." Also any Treasury (or designated Treasury)Secretary's would have a concern that if they said that they were indifferent or wanted a weaker dollar it would trigger a disorderly decline in the dollar on foreign exchange markets plus all sorts of nasty calls from central banks around the world and fulminations in Congress and the Washington Post editorial page. Why the last matters at all I don't know, but it still does for the Village elite.
The problem with Geithner, as a protege of Summers and Rubin, he may really believe in the "strong dollar" policy, at the expense of our manufacturing sector.
Watching CSPAN hearing on the Transportation Committee mark-up an heard Congressman Oberstar take some shots at both the CBO and Larry Summers. That was interesting.
Posted by: Rick Kane | January 23, 2009 9:03 AM
DRR: Geithner HAS been on the job - as head of the NY branch of the Fed. In fact, he's been on the job for over 20 years.
Geithner's views are public record, and deserve more intense scrutiny than they are given. Personally, I think he is part of the problem and not enough of the solution.
I'd rather see someone in the position who is NOT part of the bankers' cabal. Krugman, for example.
Posted by: Unsympathetic | January 23, 2009 5:32 PM
1) Geithner, et al. are being kept around for accountability... if TG or another member of the cabal had not been selected to run Treasury, then the fox would have robbed the coop, and escaped, as well. Keeping TG at Treasury is akin to 'house arrest' - a smart move by the Obama admin.
2) Baker's point here is primarily a criticism of journalists and the media in general. Yes, TG supported both a strong & weak dollar in the same paragraph. Ooops. What's more disturbing is that no reporter/paper caught the gaffe. Baker is spotlighting the possibility that MSM couldn't explain TG's gaffe, even if they had recognized it.
The larger point is that TG/Obama can talk all day long about a stronger or weaker dollar - it doesn't matter. Neither monetary nor fiscal policy is working (US gov't is now powerless with regard to economics/currency). The USDollar's fate is known and inevitable... an obviously important story that MSM will avoid and ignore indefinately, as the truth here will unwind mountains of lies and fraud that the status quo cannot survive.
Posted by: mpower | January 25, 2009 3:27 PM