Wednesday, January 12, 2011

Timothy Geithner, China, and Me...

This morning, thanks to a last-minute email invitation to Carey Business School faculty, I had the honor to listen to Secretary of the Treasury Timothy Geithner speak about China at the Johns Hopkins University Nitze School of Advanced International Studies auditorium.

He has the personality of a foundation executive, so far as I could tell, especially when he answered a question from the audience as to the respective importance of purely economic versus political decisions with this statement:

"All economics is politics."


If the Republicans were on the ball, they'd make this statement into Geithner's resignation letter. He confessed he has no faith in actual economic forces that are separate from political considerations, an ends justifies the means approach which spells more trouble to come. But I wouldn't count on them to pick up on it...

Geithner ended his event with a quick pitch for government service, as a SAIS alumnus, saying it's a "cool" thing to do. Not exactly, "Ask what you can do for your country." It was, though, the second most important statement of this morning--it revealed that America's future is going to be government jobs.

Unfortunately for Geithner, America isn't China, and I don't believe this is going to work.

Meanwhile the media insists the takeaway is that the Yuan must rise in value (Geithner mentioned a 20 percent figure from last decade in the Q &A). It seemed to me that he was saying Americans want China to follow the US economic policy of the past few years: increased domestic consumption and reduced exports. That led to the recession of 2009, as Geithner called it today. He claimed this is in China's interest, but it didn't convince me. Especially since Geithner wants the US to follow China's policy of increased exports and reduced consumption, with a greater role for government in the economy. I didn't see how that was in China's interest, either.

A reporter for China Radio International, with whom I spoke after the talk, thought it was aimed at a domestic American audience, to show that the Obama administration was getting tough on China. She said that President Hu Jintao's visit is about North Korea, since there has been no agreement--the US wants sanctions, while China wants 6-party talks.

The actual demands made on China--increased Yuan valuation, intellectual property protection, opening of markets and investments--were the same ones the US has been making for years. She said that Chinese would find that Geithner made a tough speech, which is not polite on the eve of a summit conference. If the US wishes to make China lose face, in the hopes that China will back down over Korea, currency, trade, or other issues, I wouldn't bet on it working.

I don't believe Geithner is the best man to lead a winning through intimidation strategy. He's just too small and unimpressive.

How tall did he look? Between 5'7" and 5'9" (though The Daily Beast says he's 5'5")--not the midget he appears to be on television, but not a very inspiring speaker. He has practically no gravitas. He admitted that he was not very good at economics (in a jokey way, but still...). He used stale sports metaphors about "first quarters," "second innings," and "game." When he answered questions, it looked like he was scanning talking points in his head.

Unfortunately, Geithner seemed incapable of original thought, bereft of new ideas, and no match for the leadership of the most dynamic economic country on the globe--one which certainly must believe that it now has the "mandate of Heaven" to pay back the West for "100 years of humiliation."

Let's hope the Obama administration has a Plan B.