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Jim Worth Headshot

In Geithner's Fantasy World

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There's an incredible disconnect inside The Beltway and Geithner's the drum major.

In the fantasy world of the Obama Administration and Treasury Secretary Timothy F. Geithner the country is improving and we should all be thankful for their swift and decisive actions.

Those heroic actions prevented the country from sliding into another Great Depression, but what is happening in this economy cannot be defined as recovery.

His recent op-ed in the New York Times, "Welcome to the Recovery," explains why we should all feel better about the economy. "The economy is better than most Americans realize." He actually believes that the actions they took to stimulate the economy at the height of the devastating meltdown prevented an even deeper collapse and put the economy on the road to recovery.

For whom?

The stimulus prevented a devastating slide into depression. It stabilized a failing economy. But the stimulus helped the wrong people leaving hard-working-middle-class Americans to fend for themselves.

Only in a fantasy world could stabilization be viewed as recovery. Only in America could the rich getting richer and the poor getting poorer be a positive thing! Only in politics, and Washington, could Rapunzel's hair be spun into gold!

In Geithner's world things are rosy. His reasons for this rosy perception are described in bullet points in his recent Op-Ed. But some of his most positive points have turned slightly negative in just 14 days. Turned in such a short time!

The booming exports he described have flattened and the rising manufacturing jobs which he was so proud of are beginning to fade with the downward trends in manufacturing.

Two of the reports from the three major manufacturing surveys, Chicago PMI the exception, are declining depicting slowing manufacturing. The Philly Fed has dropped precipitously from 21.4 in May to a reading of 5.1 in July. Empire fell from even greater heights; from 31.9 in April to a bearly expanding 5.8 last month. Chicago is still showing life from reinventorying after Cash for Clunkers but things could change abruptly in the auto industry.

The most important indicators of future activity, new orders, unfilled orders and shipments are deteriorating rapidly.

Businesses have repaired balance sheets but reinvestment and new hiring are not in their immediate futures. American families are de-leveraging out of sheer survival -- the scare of a second drop. And their de-leveraging will begin to eat away at -- and adversely impact -- the banks and other financial institutions.

His final point extolled the success of TARP, especially the repayment which added $20 billion in profit. But that is only the rosy side of TARP. There are unspoken billions owed by borderline Regional Banks that may still go unpaid. AIG could not only eat up every cent of profit, but could still cost taxpayers multi-billions in uncollected money.

The banks are a much bigger problem for us than Geithner is telling us.

Banks taken over by the FDIC now total 110 in 2010. Government guarantees for TARP banks exceed half-a-trillion dollars, and the Fed owns $1,700,000,000 in toxic assets that they took off the big banks balance sheets to make them appear healthier.

What about the solvency of Main Street?

For some strange reason (millions of dollars and reelection) those responsible for the well-being of the American people (politicians) turn their heads (sporting red and blue blinders) and refuse to see the pain their charges (hard-working-middle-class people) are still suffering.

Geithner doesn't even acknowledge the potential insolvency of states, counties, and municipalities.

Republicans have blocked legislation aimed at staving off this destructive insolvency to the detriment of the entire country while championing continued tax breaks for the rich; including those that caused this indescribable recession. Wait and see what will happen to the economy if the Republicans withhold the aid from the state and local economies that so desperately need it.

Withholding unemployment benefits, another Republican gem, would push the economy into deeper recession. At an extremely crucial time, they want to pull what little spending power those who are unable to find jobs have -- the very people that will spend all of it.

Let me make this perfectly clear. Greed and arrogance killed the middle-class! The rich killed the middle-class.

It's evident from Geithner's view of the world that hard-working Americans can expect little help from the administration and even less from Congressional Republicans.

Geithner needs to remove his rose tinted glasses and take a look at the economy from the 'reality' of Main Street.

It's time he did so before his fantasy world comes crumbling down around him -- and us!

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