This Crisis Cannot be Fixed in Two Years (or Three)

Though a week old, I just watched this worthwhile interview with Tim Geithner, which does a good job of putting in context a very timely issue. Regardless what you think of him or his party - I have no opinion on his appointment and consider him a competent economist - Geithner makes good points, which I think should be highlighted.

We should keep in mind (and keep repeating) these factual points if we are interested in REAL solutions:

1. The crisis was "caused" before the current administration took office;
2. The economy suffered serious damage, which will take time and pain to grow out of (reverse); and
3. All that can be (cost effectively) done to reverse the crisis, has been done.

While watching the interview (& suffering through the Crisis), pay special attention to the following language:

JIM LEHRER: But is it correct to say that, had there been a different president and a different set of officials in the government of the United States before [Obama took office], this would never have happened?

TIMOTHY GEITHNER: The crisis itself?

JIM LEHRER: Yes.

TIMOTHY GEITHNER: Oh, absolutely. The -- the financial crisis was caused by a set of policy choices that we made as a country over a significant period of time, certainly the decade before that. So, we saw financial institutions across the country take on a huge amount of risk without restraint. You saw the government of the United States living way beyond its means, borrowing with -- from future generations to finance a set of programs and tax cuts, without paying for them.

Now, lots of other things contributed to this crisis, but the crisis was much more damaging because of those basic judgments. And it's going to be much harder to solve, take more time to solve because of those basic judgments. Those were consequences of policy choices. Now, they weren't solely the responsibility of the previous president or Republicans across a period of time. A lot of responsibility across the country for those choices, but they were -- the crisis was made worse by and was made much harder to solve because of the cumulative set of policy choices that happened in the decade before this president took office.