Taking its cue, perhaps, from the Obama Administration's reported efforts to reach out to the political blogging community in the hopes of cultivating broad support for its ambitious agenda, the Treasury yesterday organized a meeting between various Department officials and a group of economics and finance bloggers.
Among the bloggers who attended the "discussion," which centered on financial reform, the Treasury's efforts to stabilize the financial system, and the challenges ahead, were the publishers of Naked Capitalism, Interfluidity, Marginal Revolution, Kid Dynamite’s World, Across the Curve, Accrued Interest, The Aleph Blog, and Financial Armageddon (one of my two blogs).
While Naked Capitalism's Yves Smith has done a good job in "Curious Meeting at Treasury Department" of summing up what transpired -- which, admittedly, left most of us feeling like we had more questions after it ended than when it started -- I did learn a few things at the gathering that I found particularly interesting:
- In response to a question about what would happen if, as Carmen Reinhart and Kenneth Rogoff have concluded about past financial crises, the current episode also proves to be a "protracted affair," it wasn't clear that there was a "plan B" in place if things don't recover in 2010 as many mainstream analysts expect. In fact, the suggestion from one official was that the tenure of the current crisis would likely be nearer the shorter end of market expectations.
- There was also a bit of a disconnect between the remarks Treasury Department officials have made in public forums and what was said at the meeting. Last Thursday, for example, Bloomberg reported that Secretary Geithner spoke to the Economic Club of Chicago and said, “You can say now with confidence that the financial system is stable, the economy is stabilized....You can see the first signs of growth here and around the world.”
Yesterday, however, a number of those who attended clearly acknowledged that things could (still) go wrong and said such fears kept them awake at night. While that is not unusual in and of itself, at the very least it adds to doubts I and others have had about the true state of the banks, the financial system, and the economy.
- The meeting appeared to confirm the strong grip that Wall Street has on the levers of legislative power. In response to a throwaway remark by one of the bloggers present that discussions about the overly large size of the financial sector relative to the real economy were "not politically correct," one official suggested the reality was just the opposite, and that a substantial majority of the public agreed with that assessment.
If you take that together with the assertion that the Treasury -- and, by extension, the Administration -- is fully committed to financial reform, as well as the fact that the Democrats dominate Congress, the implication is that other forces -- namely, the moneyed interests and their lobbyists -- are standing in the way of necessary change. Nothing new there, I guess