We’re sure he was just trying to sound strong, but Tim Geithner’s response to questions about the credit rating of the U.S. has the stink of historical notoriety written all over it. When asked by ABC News if the U.S. would lose its triple-A credit rating, he said bluntly “Absolutely not. That will never happen to this country.”
Frankly, we don’t need to hear bluster from the Treasury Secretary, because at this point in the crisis, it is painfully obvious that a great number of things that “could never happen” have indeed happened, and sitting there and arrogantly saying they can’t is just the wrong approach.
What he should have said was “that will never happen, because we are dedicated to maintaining the good faith and credit of the United States. In times of grave peril, the United States has always been a beacon of light and a refuge, and we are dedicated to doing absolutely everything within our power to keep it that way.” Or something like that.
“That will never happen.” It took all of about five seconds for me to think of Irving Fisher’s “permanently high plateau” comment, just before the stock market crashed in 1929, a crash that, incidentally, took the market something like 25 years from which to recover.
Now, the credit agencies have their own problems and tattered reputations to worry about. But remember that a triple-A rating isn’t a scientific measurement; it’s just one private company’s assessment of an asset’s safety, in this case, U.S. bonds.
What matters more than the word of some private outfit, whose own veracity is subject to question, is the reputation of the United States, and right now, the government is coasting on that reputation. But in order to keep that reputation so sparkling, some hard decisions are going to have to be made about the government’s accounts and fiscal policy. But, of course, no real decisions are being made right now, which is why the Treasury Secretary had to get up and offer up bluster and a stern gaze.
Bluster is a thin replacement for action.
Here’s the interview, courtesty of ABC: