You could be forgiven if you thought we had a little unscheduled burst of truth telling yesterday, because it sure did seem like some government official types were a little more candid than usual.
First there was a speech from St. Louis Fed President James Bullard, who suggested if the Fed stuck the path it’s taken in previous recessions, that it wouldn’t raise interest rates until 2012. This sparked quite a bit of talk. Typical Fedspeak on this point usually is no more specific than the boilerplate statement “rates will remain low for an extended period.” They don’t put actual dates on policy, lest the markets do something like, oh, you know, start a new carry trade with the dollar or something crazy like that.
Then there was a surprising statement from none other than our Treasury Secretary, Tim Geithner, a man who has been accused of being a bit too close to certain bankers, who called out the nation’s banks in a blunt statement at a small-business forum. Geithner was basically imploring the banks to start lending, because, you know, they’re not, and, well, they kind of got billions of dollars from the government with the idea that they would lend at least some of it out.
“The recovery in earnings across the banking system . . . is not because the surviving banks are particularly smart and clever,” Geithner said. “It’s because the taxpayers of the United States and their elected representatives decided that to save the economy, we had to save the financial system.”
But the biggest one, the doozy, came from the highest office in the land, the President himself, who sat down with Fox News (“cats and dogs, living together, mass hysteria!”) and actually said the economy could slip into a double-dip recession, if the national debt keeps skyrocketing, which could sap consumer confidence and lead us back down the rate hole (he didn’t say rat hole, of course. Those are my words.)
But the President, of the United States, did indeed warn of a double dip (which makes the assumption of course that we’re out of the first dip, right?) It may not exactly have been a Carteresque “Malaise” statement, but it was pretty frank.
2012 (interest rates, not the end of the world.) Banks were bailed out. Double-dip recession. That’s some straight talk from a crowd that’s usually trying to play us like the rube at a three-card monte game. Heck, even the Fed’s usual on-the-one-hand, on-the-other-hand act these days has a nasty other hand.
Now, I doubt this is all coordinated, but you think there’s something these guys are seeing that, say, Wall Street’s finest aren’t?
Nah, must just be a set-up for the next stimulus package.