Like the famous George H.W. Bush moment when he had never seen a grocery scanner, our Treasury Secretary Timothy Geithner made the following public comments:
Sept. 9 (Bloomberg) -- U.S. consumers are starting to save more money after years of accumulating too much debt. "Over the past generation, we have gone from a nation of savers to one of borrowers," Geithner said at an event with Vice President Joe Biden at Syracuse University in New York today. "We have devoted too many resources to consumption and not enough to investment."
"We have devoted too many resources to consumption and not enough to investment."
Tie me to the mast and pour hot wax in my ears, and whatever you do, don't cut the ropes for how could one resist a siren's song so sweet.
"U.S. consumers are starting to save more money after years of accumulating too much debt."
The billions of dollars in bank losses made good by government loans seems to have escaped his memory. This is where an average person could assist the Treasury Secretary and whisper in his ear, "Sir, wages have been going down for all but the top 20% of the economy. They don't have the money to save and medical bills account for 3 of every 5 bankruptcies. And besides, sir, the TARP money was used to replace the money put in the bank by savers."
Americans are saving more because they are, in point of fact, terrified, and after listening to Mr. Geithner, their reasoning appears sound. We are in a depression and if we all save our money the depression only grows worse. Then the boss man lays off more workers and the fear is multiplied to the next level. I guess the Treasury plan is for us all to go back into the stock market and invest.
That would certainly help the banks and the brokerage houses, but it wouldn't do squat for the average man on the street's economy. A higher savings rate means less money available for consumer spending. With consumer spending 70% of the economy and with half of the manufacturing base we had a generation ago, it is hard to understand the Secretary's logic other than to ask, "What?"
Maybe he just doesn't know that we are out here? Maybe he doesn't make the connection between economic benchmark numbers and those creatures running loose in the streets that he sees occasionally through the tinted windows of his limousine. That's us, Tim. If you can't stop, at least wave.
That same fear is causing those with the money to invest to stay on the sidelines. Only a fool thinks that this turmoil is over, or only a fool living in this world.
Consumer credit fell by 10% at an annual rate in July to $2.5 trillion. Non-revolving debt, including loans for automobiles and mobile homes, plunged by $15.4 billion in July. Revolving debt, such as credit cards, fell by $6.1 billion.