Some Econobloggers Visit the Treasury

Readers may wonder why I haven’t written about my visit on Monday to the Treasury, but truth be told, I headed out afterward with Mike Konczal and Steve Waldman to get a drink, and we all looked at each other quizzically. I said something along the lines of “I’m not certain there is anything to write about,” and they nodded in agreement. I had less than a half page of notes.

That isn’t to say we didn’t spend nearly 2 1/2 hours in a high-ceilinged conference room, and that we didn’t engage with Treasury officials, including Timothy Geithner, in what looked like conversation. But the assumptions of both sides re process as well as substance were so far apart that it often felt like we were talking past each other.

One part of the dynamic was the home court advantage the Treasury enjoys. This is their drill, their offices, they no doubt used their spiel on others and have it pretty well debugged, and more important, they play well off each other (they give the impression of having good rapport with each other; there was some banter on their side). So they have message discipline and stay unified and still manage to look relaxed and informal. By contrast, we seven bloggers (the others were Tyler Cowen, Alex Tabarrok, Phil Davis, and John Lounsbury) were on hold in the very large corridor till the conference room cleared up, which meant we didn’t even have the chance to ask each other, “And what do you want to ask about?” Our interests were likely to be (and were) somewhat divergent, but it would have been nice to know to what degree.

Despite our heterogeniety, we all took a skeptical posture towards the Treasury team. One has to think they anticipate that, which then begs the question of what they expect to accomplish with these meetings. We aren’t journalists, so the access card does not work; the infrequency and format of these sessions means they don’t build personal rapport (and there are good reasons why not; from our end, it costs time and money to go to DC; from their end, we aren’t important enough to warrant more frequent contact).

So they may have other motivations, but a safe assumption is that they regard this as marketing, and a famous cliche is “50% of what I spend on advertising is wasted, I just don’t know which 50%.” We probably look like part of the wasted 50%, but they can’t be certain, and the costs to them of having this sort of meeting are low, so they might as well keep the experiment going.

In the last session I attended (November), one consultant (Lee Sachs) and one official (Assistant Secretary for Financial Institutions Michael Barr) made presentations, which did provide some focus. This time, Barr (who was even more Midwestern earnest than last time) threw the session open to questions from us, and quickly got a complaint (repeated in various forms over the meeting) that the Treasury had done a poor job of explaining what its goals had been for financial regulation and what the finreg bill stood for.

We’d ask questions (usually too long and complicated), they’d offer replies which were sorta responsive but not really, in that the kept stressing what had been done and why that meant the banking system was much safer (higher capital requirements, living wills, central clearing of “standard” derivatives), and we weren’t buying it, but our pushback (predictably) went nowhere.

The most revealing bits were the asides and the use of language (for instance, the first remark on housing included a mention of renters; the fact that they see this as a group to be concerned about suggests the officialdom will be loath to do too much for homeowners, hopeful analyst reports from the Street to the contrary). One interesting set of exchanges involved regulatory authority. Steve Waldman and Tyler Cowen both made articulate cases (Tyler from remarks in the meeting, Steve from pattern and practice) that there was good reason to doubt the authorities would use their clout; there was no effective reply because none could be made (it basically boils down to “trust us”).

One bit I am still puzzled about is the amount of time Geithner spent with us. He is famed for keeping a tight schedule, and he showed up at 4:30 PM and stayed 50 minutes, which was 20 minutes beyond the official meeting close. Although the Treasury staffers who had run the session before arrived Geithner were articulate and knowledgeable, he is particularly adept in this smallish meeting format and seemed to noodle our questions enough so that his responses were typically more direct yet managed to incorporate a lot of thoughtful nuance (not that he didn’t avoid certain issues, mind you; he argued that Treasury had limited authority on a certain issue; I pointed out ways in which Treasury more than enough leverage to bring a bank to heel; he avoided acknowledging the matter I raised; more on that in due course). He did make some minor disclosures (like saying he wasn’t supposed to talk about Fed policy, then doing just that, hinting that the catfood commission might recommend changes in taxes, which in context might mean more consumption taxes, as in a VAT).

I could try to reconstruct in more detail who said what to whom, and I’ve avoided reading other posts on the meeting (I’ve been told Alex Tabarrok posted right away and have seen the headlines for John Loundsbury’s posts). But I’m not sure I can reconstruct them, and more important, I’m not certain what (or more accurately, whose) ends it serves.

Finally, one reader did tell me Alex Tabarrok got some comments criticizing him for falling into Treasury’s orbit by meeting with them. While in theory one could lose one’s edge by staring the opposition in the eye, sports teams do this as a matter of course. If we saw the staff of the Treasury more often and we had something to gain, that could be a concern, but these sessions take a lot of time, and I question what the upside for bloggers is. The immediate one is getting one’s nose inside a new tent, but that is a matter of novelty and wears off after the first encounter. I suspect the main effect is that we and Treasury each sharpen our games a teeny bit by engaging directly on points of contention.

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  1. anonymous

    How does the US avoid a VAT? Critics on the right have been claiming that this is the stealth policy of this administration. I’d appreciate some insights from those who understand this proposition.

    1. Yves Smith Post author

      This is a matter of the wrong medicine at the wrong time. As long as we are running a big trade deficit, either the private sector or government needs to borrow or else prices and wages fall (which makes the debt burden as a % of GDP worse). And right now, businesses are saving (as in not investing, big corps are a bit but medium and small companies are paying down debt, which is a form of savings).

      So the first issue is that the idea that we need to balance the budget now is barmy. And if we want to balance the budget, we need to get serious about our trade deficit.

      But no one wants to run a budget deficit now. This is something Geithner mentioned (I am independently of the same view), a bigger deficit is in order now, less monetary easing, but with no political support for deficits, we have the Fed trying to do too much.

      Second is the problems touted as big problems are way overstated. Social Security can be “fixed” simply by raising the caps on payroll taxes. The problem with Medicare is cost escalation, not demographics, and we again lack the will to fix our way too costly, not very effective health care system. Taxes are the wrong solution to this issue.

      1. anonymous

        Thanks, I’m not remotely concerned with the deficit or social programs. I’ve mentioned in past posts that even for those voicing fears over the deficit, I suspect that expressing ‘concern about the deficit’ is a form of shorthand for expressing general disapproval over the way this administration is prioritizing.

        What do you suggest might be done to improve the trade deficit? I take it that you mean the US needs to start exporting more and importing less. How’s that going to happen?

        I don’t see it, and with the caveat that I’m not suggesting I speak from authority, it seems to me that domestic consumption is the only way to increase demand. That means increasing consumer confidence and the only way I can see that happening is with a thorough house-cleaning in November.

        I heard Christie speak and I’d be a lot more willing to trust moderate Republicans like Christie, or even Senator than Dems on the economy. Dems have, after all, had the complete run of the joint. Even as a hostile critic of Obama, it never occurred to me that the Dems might do a poorer job on the economy than Bush or McCain.

        But I digress. If you can see any way to improve the trade deficit, please let us know. Thanks, as always.

        1. Hugh

          This is completely wrong. The economic mess we find ourselves in goes back 30 years, to Reagan, parts even to Carter. It has been constructed by both Democrats and Republicans over the intervening years. A vote for either a Democrat or a Republican is a vote for what we have, call it fascism, corporatocracy, or kleptocracy.

      2. Fed Up

        “This is a matter of the wrong medicine at the wrong time. As long as we are running a big trade deficit, either the private sector or government needs to borrow or else prices and wages fall (which makes the debt burden as a % of GDP worse).”

        I don’t believe that is quite correct about the gov’t sector.

        1. Yves Smith Post author

          Please see Rob Parenteau’s posts on this topic, he explains this in great detail, particularly his two posts on “Leading PIIGS to Slaughter.”

          1. Fed Up

            Yves, I get the national accounts up to a point. I want to focus on whether the “gov’t” needs/should be borrowing. What if the “gov’t” became a user of the currency like the cities and states?

            What are the similarities and differences between private debt and gov’t debt?

  2. attempter

    Finally, one reader did tell me Alex Tabarrok got some comments criticizing him for falling into Treasury’s orbit by meeting with them. While in theory one could lose one’s edge by staring the opposition in the eye, sports teams do this as a matter of course. If we saw the staff of the Treasury more often and we had something to gain, that could be a concern, but these sessions take a lot of time, and I question what the upside for bloggers is. The immediate one is getting one’s nose inside a new tent, but that is a matter of novelty and wears off after the first encounter. I suspect the main effect is that we and Treasury each sharpen our games a teeny bit by engaging directly on points of contention.

    Just look at what happened with the “progressive” blogs. Granted, those who became Democratic party astroturfers were already directly “political” and pro-Democrat (if not party cadres to start with) in the first place.

    But in principle the same co-optation and corporatization can be preformed on the econoblogs.

    I’m not surprised that Geithner’s willing to float the idea of more regressive taxation, since they’ve been floating that since the start. (I first started seeing VAT propaganda last fall.) In principle it fits perfectly with class war via “austerity”. It’s only the word “tax” which is politically toxic, which is why they’d prefer to avoid it for as long as possible.

    One bit I am still puzzled about is the amount of time Geithner spent with us. He is famed for keeping a tight schedule, and he showed up at 4:30 PM and stayed 50 minutes, which was 20 minutes beyond the official meeting close.

    Why do you assume the actual Geithner schedule is the same as the one they told you? I’d bet the 50 minutes was calculated to make it look like he gave you 20 actual minutes. Sort of like how boxes of fish sticks or canisters of slim-jims consistently contain “one extra” beyond the number stated on the box. It took me awhile to figure out that that was calculated, and you’re really not accidentally getting something for free. (That was when I was a kid; I don’t eat junk like that anymore.)

    1. Yves Smith Post author

      You are incorrectly assuming I valued more time with Geithner. I needed to be on an airplane, and that extra 20 minutes cut into my drinking time.

      And that 20 mins was not scheduled, it was an option. For some reason Geithner decided to stay on. Who knows, maybe he had a phone call he didn’t want to return :-)

      As for political blogs being coopted, first many of the writers are in DC, so there isn’t an expense/travel time sink/general annoyance factor in being summoned to an out of town meeting on your own dime. Second, the access card can be played with them. By contrast, how much econoblog content results from personal contact? I don’t even bother writing up the few conferences I go to. so in my case, just about none, and that’s true for most econobloggers. Third, Google “veal pen” + Obama. Many of them are at risk of having their air supply cut off.

      1. attempter

        I didn’t assume you personally wanted the bonus time with him. I just doubt that it was really spontaneous on his part and that he was being truant from any significant element of his schedule.

        I have seen heard of some contraction among the hack blogs, like the hack from Openleft going over to Dailykos. I suppose once they fail utterly in their astroturfing for November they’ll be cut off even further. That’ll be one occasion for Schadenfreude amid the nightmare, I suppose.

      2. jake chase

        Next time you get invited you might prepare a list of questions and insist upon getting answers instead of just listening to administration flunky BS. Of course, I wouldn’t count on a subsequent invitation after a performance like that.

        Incidentally, how many treasury officials at the meeting had shaved heads?

      3. i on the ball patriot

        It’s more than that…..

        Yves said; “Despite our heterogeniety, we all took a skeptical posture towards the Treasury team. One has to think they anticipate that, which then begs the question of what they expect to accomplish with these meetings.”

        • They strengthen their empowerment. You serve to legitimize and validate their corruption and power by lending your good name to the process of it.

        • It gives your readers a false sense that they are being listened to by a ‘responsive’ government. Nothing could be further from the truth.

        • They can claim that they have bent over backwards to solicit opinions from all societal elements.

        • They cause you to waste your time, your readers time, and your own valuable resources that might have otherwise gone into something more productive, like maybe organizing election boycotts as a ‘vote of no confidence’ in this over the top corrupt deceptofatzi government.

        • And yes, they cut into your drinking time.

        Better to stay away. Deceptofatzi scum bags all!

        Deception is the strongest political force on the planet.

      4. Yves Smith Post author


        I assume that Geithner had a slot of open time (it IS summer, remember, Congress is not in session). Inertia prevailed.


        I DID have questions prepared, and I suspect others did too. They still got deflected.

        Pray tell, how can anyone “insist” on getting answers? They DID answer our questions, almost always multi-paragraph answers. And the meeting dynamics meant none of us could hold the floor for very long.

        You seem to operate with the sort of prosecutorial fantasy created by movies about trials, like A Few Good Men, in which a cross-examiner fairly quickly elicits a damning revelation from a witness. First, in a trial, the person is under oath and the judge can insist on direct answers to simple questions. Second, I’ve been to REAL trials with REAL attorneys who have won multi-million judgments often (as in they are pretty good). Guess what, even with the advantage an examining lawyer has, real life cross examinations are tedious. The lawyer often has to circle a point again and again to establish a fact pattern, and the “gotcha” in those rare moments when they occur, is usually in not in his testimony, but his testimony in relation to other facts presented (documents, other testimony).

        1. anonymous

          I respect the effort you put into clarifying your reasons for attending and offering some illuminating observations on the dynamics at play. Unfortunately, I expect you and the other guests were much more willing to listen than your hosts, for reasons well-explained by Richard down thread.

          But that’s the point. You did attend and you did listen. You tried to ask questions and you did voice some of your concerns. That in itself makes it more difficult for the WH to offer the “Nobody told us” or “Everybody agrees” defense. Note, I say “harder,” not impossible or unlikely.

          To a degree, I respect a decision makers ability to walk past or through objections and understand that these meetings serve a necessary role as pro forma theatre. But that doesn’t change the fact that for most people, economics is not a science, but an experience. And this experience isn’t much fun. It’s an experience many would like to see end, or change.

          Results matter in most workplaces. One of the clearest indications of bad management, IMHO, is when they do for workers, but they don’t for managers. That’s what’s taking place now, delinquent managers are being rewarded or going unpunished for poor decisions and actions, while in many cases the workers or ordinary citizens are being penalized, by poorer services, eroding infrastructure, and eventually, higher taxes.

          We’re not going to see a second stimulus. That fact alone speaks volumes. You deserve credit for extending the olive branch one more time, if I can use the analogy. They didn’t listen after Lehman and they’re not listening now.

          Why should they?

  3. Bruce P.

    I rarely comment on your site, but please be assured I am thankful for the contributions you and others make.

    Re: the Treasury meeting. I believe that one of the most cursed phrases/postures of modern life is “impression management.” Obviously, the boys on Team Obama practice it 24/7, but they are not alone and certainly not the first.

    Unfortunately, impression management — a fancy name for PR — is increasing exponentially today while truly substantive and informative communication shrinks in comparison. As our problems exacerbate, impression management accelerates. Whether it is with the finance mess or global climate destruction, the principalities and the powers all seem to spend more time on their message sculpting. If Marie Antoinette were working in the White House or up on the Hill or on Fox News and much of the main stream media (or for that matter, most political campaigns, her advice most likely would be, “Let them eat illusions!”

    1. psychohistorian

      Thank you for your comment with which I agree and the “Let them eat illusions” jibe is insightful.

      Americans do not understand the degree to which they are being manipulated against their best interests by this Impression Management/PR. Unfortunately our educational system continues to manufacture citizens without critical thinking skills replaced by faith based inanity.

      Thanks to Yves for her ongoing naked empire reporting.

  4. But What Do I Know?

    You know, Yves, your candor and suspicious nature do you a great deal of credit. I’m sure that you will receive the usual criticism for “selling out” and “becoming co-opted,” but to me it looks like you have the meeting and the motivations nailed perfectly. The folks in Washington think that “access” is so important (it is their coin of the realm) that they can bribe you with it–and that by having some “big name” people in the meeting you’ll feel important and crave further contact, whether or not it is worthwhile or not. I get the sense from reading your post that you don’t give two craps for all that, and it just shows your integrity. Geithner is perfectly willing to talk to you–and perhaps even suffer through a few minutes of you talking–but really isn’t prepared to listen or take seriously what you have to say. I’ve been in meetings like that and it’s darn hard not to walk out and feel like you are important because you just got to talk to Mr. Big when in reality he was just humoring you in the hopes of co-opting you.

    Anyway, thanks again for your honesty and self-awareness–that’s what makes this blog great. . .

  5. Richard Kline

    What is the utility of the time you, and the others, spent engaged with signficant figures in Treasury activities?

    Policy is made at the center, while opinion is made at the margins. That is my view, and I know that we’ve discussed this before in passing. This is the case since activity coheres around a core goal or resource, while perspective coheres in relation to a stable boundary or dividing line. That is the (simplistic and abbreviated) explanation I would offer. Econobloggers are engaged in a peripheral activity; by which I don’t meant to say a marginally important activity, but one active at the periphery of informed opinion. From the foregoing, it follows that in my view it is at the margin that _change_ in opinion is most often effected. And that as opinion changes, it compells a change in policy because the context of policy decision becomes shifted. Mainstream opinion tells one what one knows; peripheral opinion is more disparate and maleble and may take a shape that one did not know. Of course not all of the econobloggers share a common perspective. I would go so far as to suggest that you all were invited, and separately brought to this function, in such a way that you could not form a coherent group opinion, deliberately so: harder for you to resist their coherent opinion, and much harder for you to push back, individually or in aggregate. The function of the meeting would appear to have been to ideally shape your perspective, and at worst to disperse your ability to cohere a competing perspective.

    But that is the utility of _their_ time in taking your time. Not even necessarily that any one or several of you invitees are important in shaping opinion but at the least to disrupt you from cohering opinion at the margin in ways inimical to Treasury’s present goals. Consider this, though: what if _you all_ had gotten together, gone over at least an agenda if not a set of critiques/demands, and requested this meeting. That is advocacy; even activism. The Treasury chose for none of that, nor could one imagine that they sought that—but you all could so seek and so choose. What, then, is the utility of your time. Consider if in other times, those of similar weight to the ones who summoned you all had brought in any or all of Upton Sinclair, Roger Casement, Emmeline Pankhurst, W. E. B. duBois, John Agee, or Arundathi Roy and said, in effect, “We don’t see that you have all that much to complain about, can’t we come together on this?” How would they choose to use that power hour? how then could you invitees? Are you, individually or in some collective manner, going to change the perspective of those figures of power? Well, that doesn’t seem likely, now or then. But you can choose to state your case, not listen to theirs. You can sow doubt in their mind that they can contain the debate, to say nothing of controlling it. You can say, as you did Yves, here is fact to your bunk, that the public knows the one from the other, and that only actions like (x, y, and z) will bring the public closer to their side rather than further.

    You were brought to listen to their case more or less it would seem. One can change the agenda though, and state ones own case, to the extent to which one has one. That goes back to the individual goals of those econobloggers such as they may be: build brand, spread the word, make friends, change the world, refuse the drink of illusion, ask for confirmation or rebuttal before publishing the state of the Emperor’s wardrobe as of X date. Or whatever. I see the meeting as useful. And the more useful the more those from the periphery have their own agenda(s) in place upon arrival. As long as that agenda isn’t speak when spoken too, which I know is not your operational mode Yves, natch.

    1. doom

      Like Chomsky says, speaking truth to power is overrated. Speak truth to the powerless, he says. That would be everyone who doesn’t want to defibrillate dead banks.

    1. Yves Smith Post author

      Tom Adams and I have tried multiple times to get the FCIC, SIGTARP, and the SEC to talk to us through various channels. No success to date.

  6. Tom Crowl

    The title of this post is an honest one. As is your review of the meeting.

    “Some Econobloggers Visit the Treasury”…

    What else can you really say…

    The only use of such a meeting is “Impression Management”… as Bruce mentioned above.

    The structure of the meeting defined its dynamic. You could expect about as much meaningful interchange of ideas as you’d have in a meeting with the Pope and his Cardinals…

    There can’t be true discussion without a framework that encourages it.

    You think this meeting was useless? You should try being a homeowner and talking to a bank.

    I know. I’ve tried.

    But more on that later… that’s a whole different can of stupidity.

    1. Doug Terpstra

      Great, tom: “You could expect about as much meaningful interchange of ideas as you’d have in a meeting with the Pope and his Cardinals…”

      Yes! It is time for someone to nail the theses of an eonomic reformation, to the cathedral door! As Yves said recently, the new paradigm needed cannot come from within the hallowed sanctuary.

  7. Aunt Deb

    Dear Yves, I read your blog and a number of other econblogs regularly. I have no economic background and often struggle to have even a glimmer of the implications of the matters discussed. But for me, that’s part of the point of reading the econblogs. I know myself to be ignorant on this topic, but I think I must try to understand it in order to have a fighting chance to vote intelligently, to try to influence my political representatives, and to protect my kids and grandkids.

    I think there are many people like me, who are aware that we cannot turn to our political representatives or the government for clear discussion of the economic situation and the future. This is why we need the econblogs and people like yourself and others, who dedicate great amounts of time and thought to real analysis and who make that analysis available, freely.

    You do have influence. Mr. Kline’s comment, above, strikes me as a very good one, particularly the part about coming to these meetings with a clearly thought-out agenda or platform.

    1. Yves Smith Post author

      You and Richard assume incorrectly that we econobloggers are some sort of unified force.

      First, the Treasury invites a lot of people on fairly short notice (2-3 weeks). Most turn them down due to conflicts or travel time/costs (there are a lot of top econobloggers, like Calculated Risk, too far from DC for a trip to a meeting to make any sense). So it’s a peculiar, random bunch that shows up. And we have no way of knowing who will be there. I did guess correctly that Steve Waldman would be there. Tyler Cowen is fairly close by, he was also likely to attend. There were other I expected to be there that weren’t, and others I didn’t anticipate that were.

      And we are not politically on the same page, which would make it pretty difficult to present a unified front. Cowen and Alex are libertarians. I’d say most of the people in the room were deficit hawks, while I think we’ve overdone monetary policy (not the Treasury’s beat) and not done enough fiscal spending. I bet some people in the room buy the idea that CRA and Fannie/Freddie caused the crisis, which has been pretty well debunked. So the areas on which we agree (finreg is wildly inadequate to prevent the next crisis) are narrow. We DID hit that from various angles, and Treasury has persuasive sounding answers if you didn’t know better. And they stand by them. No penetrating that position (I even got hectored by the lone not so smooth Treasury guy for not having read a Fed paper on bankster comp, when I mentioned that nothing was being done to address the comp practices that rewarded de-equitizing financial firms. After taking a few sentences to regroup, I basically told him there was no reason to believe that anything in a Fed paper would be translated into meaningful measures).

      I think this proves the Chomsky point from reader doom above. Speaking truth to power is overrated. Most of them know the truth, or at least know the “truth” is a position they need to contend with.

  8. Psychoanalystus


    I apologize for dwelling on the trivial, but I was wondering whether Tim Geithner comes across as more relaxed in these private meetings, or is his usual and uncomfortable self as when I see him on TV. For example, did he kick back in his chair, put his feet on the table, lit up a Havana, poured himself another brandy, and (while yawning) said nonchalantly, “Nice to see ya’ll stopin’ by again. How may I be of service today?” Or, did he sport his typical deer-in-the-headlights look, and nervously kept repeating one of the following:
    1. Can I have that in multiple choice format, please?
    2. Can I use my “call a friend option” now? I think Oprah might know.
    3. Can we move on to baseball now? Or hockey?

    Psychoanalystus :)

    PS – now you see why nobody invites me to anything important.

    1. Yves Smith Post author

      At the first econoblogger meeting, Geithner managed by happenstance to show up in the room when we were all looking at someone speaking at the far end of the table (Barr, who started grinning, we couldn’t figure out why).

      Geithner clears his throat, we all turn to see he has snuck in and is now at the head of the table. He clearly enjoys having surprised us and said, with a big smile, “So what the fuck do you guys want to know from me?”

  9. RN

    Yves Smith wrote:

    “You are incorrectly assuming I valued more time with Geithner. I needed to be on an airplane, and that extra 20 minutes cut into my drinking time.

    And that 20 mins was not scheduled, it was an option. For some reason Geithner decided to stay on. Who knows, maybe he had a phone call he didn’t want to return :-)”

    Astonishing. You get unprecedented, unwarranted access to the top financial person in our nation, and THIS is the attitude you cop. He stays overtime to answer your questions and you COMPLAIN it cuts into your DRINKING TIME??

    You are garbage, plain and simple.

    1. Psychoanalystus

      Wow! Take a chill pill, buddy. Life’s too short to get a heart attack before 40… :)


    2. Yves Smith Post author

      I make a flip, irreverent comment, and you get bent out of shape. Please. I bothered killing a day to come to this meeting, and that does not include the time spent beforehand (pinged my buddies for question ideas, did some research before Monday, spent a fair bit of time on the phone with two experts). For instance, I brought a full three hours of train reading on Treasury topics I wasn’t fully up to speed on like HAMP. You have no idea of the investment I made to go to this meeting and you have NO business copping a ‘tude with me.

      More seriously, by 5:00, the nominal meeting close, it was blindingly obvious we weren’t going to get real answers. You mistakenly assume Geithner was willing to answer our questions. This was a SHOW of answering questions, but the “answers” were only nominally responsive and all stayed on message. Big difference.

      Now it is instructive to see Geithner in action, he really is very good (and the contrast with his on air appearances is simply stunning, you can easily see from these performances why he is where he is). So there was some incremental value in seeing him a bit longer. But you kid yourself BIG TIME that there was anything substantive we could gain from this additional exposure.

      Yes I am being irreverent, one might even say disrespectful, but the more serious point behind my comment is lost on you. By 5:00, there was more to be gained by spending more time comparing impressions with Konczal and Waldman while our memories were fresh than getting more of the same, even from Geithner.

  10. Petey

    “One has to think they anticipate that, which then begs the question of what they expect to accomplish with these meetings”

    The core part of this administration’s base is the intelligentsia. They’re obviously having a BIG problem with the intelligentsia on macroeconomic matters, so simple damage control is called for.

    And while a single meeting obviously isn’t going to send you over to the dark side, there are two factors working here. 1) Access is like a drug. It works on its recipients in some non-obvious and non-rational ways. 2) It’s often harder to write nasty stuff about folks who you’ve met face to face, and who done their best to be charming and intelligent to your face.

    In short, if I were this administration, I’d be reaching out to someone like you in precisely the manner that Treasury did. It’s the smart messaging play on their part.

    The only thing that scares this WH is smart people telling the truth. That’s you, so they’d love to move you an inch or two over towards them.

  11. noodle

    Petey, you vastly overestimate how much the administration cares about the view of unknown-outside-their-teeny-circle bloggers such as Yves.

    Further, Yves is so cynical, she almost never writes anything good about anyone. So imagining this event as an effort to “woo” her is a failure of understanding on many levels.

    1. anon48

      “Petey, you vastly overestimate how much the administration cares about the view of unknown-outside-their-teeny-circle bloggers such as Yves.”

      Sorry, but I think you vastly underestimate how influential this blog has become. Politicos love parades. Especially when they get to walk out in front. This was just another opportunity for them to possibly influence the direction of public discussion(and to which Yves seemed to allude with her 50% of advert singing comment).

    2. Petey

      “Petey, you vastly overestimate how much the administration cares about the view of unknown-outside-their-teeny-circle bloggers such as Yves.”

      Again, the core of this administration’s political base is the intelligentsia.

      Tom Daschle didn’t lose out on his healthcare czar job because his day job as a lobbyist for healthcare insurance companies outraged the traditional Democratic base. Instead, Tom Daschle lost out on his healthcare czar job because the NYT editorial board came out against him.

      If we assume my point about the intelligentsia being this administration’s core political constituency, then seemingly “unknown” blogs like Yves’ that are read by the right people are actually a much bigger headache for them than it might seem at first.

      What elites thought wasn’t important to the last administration. What the elites think is very important to this administration.

      Like I said: the only thing that scares this WH is smart people telling the truth.

  12. RN

    Psychoanalystus says: “Wow! Take a chill pill, buddy. Life’s too short to get a heart attack before 40… :)”

    You’re right. It doesn’t matter that someone invited into the nation’s economic discussion at the highest levels complains the next day it cut into her drinking time.

    Anyone wonder anymore why the US is toast?

    1. Yves Smith Post author

      RN, with all due respect, you are way off base and nasty about it too. You clearly suffer from an American disease of having no sense of irony, and of thinking public officials work for and are responsive to the public, as opposed to big moneyed interests, which none of us in that room represented. Read my comment of 4:26 PM. I did take this meeting seriously, I did a fair bit of prep, and by contrast, the Treasury staffers looked so confident in their control of their message that they basically winged it with us. The contrast with the earlier meeting, where they had a slide deck and a bit of a formal talk, was noteworthy.

  13. Pascal Blacque

    Thanks for your honesty. While your comments and reflections on the political motivations for the meeting are spot on, they do little to inform us, so far, on the policy content of the meeting. What are exactly “the assumptions of both sides re process as well as substance” and how are you “so far apart”? It would be good to know that issue by issue or bullet by bullet (for example, what are higher capital requirements suppose to achieve and why are current/proposed levels not good enough or even relevant?). I know you address a lot of these issues on a daily basis but it would be informative to have them in table format or categorized by issue/policy with the viewpoints of both sides… It would help to visualize the issues and to monitor their progress.

    Secondly, I urge you to continue attending these meetings and others like them. Maybe all of you econobloggers could have a debate (a new issue-specific blog?) on the above policy issues and formulate a common front (I know, I know) for the next meetings. Maybe one day, econobloggers will hold conferences where Fed and Treasury officials will yearn to present their case.

    In short, we simply need to be better prepared in order to better inform ourselves.

  14. Psychoanalystus

    My fiend, they invited bloggers to see if they can be manipulated closer into their camp. That’s why one has to keep his or her cool in these situations.

    Gotta scoot! You’re cutting into my drinking time… :)


  15. RN

    Psychoanalystus says: “My fiend, they invited bloggers to see if they can be manipulated closer into their camp”

    1) “Fiend”.. I love it. :) The typo juste. :)

    2) See noodle’s note above.

  16. The Prudent Investor

    I am amused to see the Treasury’s second attempt to reach out to bloggers has obviously been turned down even more extensively than their first attempt.
    Checking David Merkels list of bloggers that were invited for the Nov 2009 get-together and did not attend,
    ( )
    I feel immense pride that I was seemingly the only non-US blogger invited.
    I stay with the reasons in my comment for not showing up that can also be found at the link above.

    I may add here that apart from cost/time reasons (I reside in Austria) I have long ago decided not to visit the USA again as it could expose me to the cruel procedures of immigration and other harassment agencies who see it as their right to take a copy of my harddisk (or impound my Mac altogether) which I consider an extension of my brain memory. No one’s gonna copy that!

    The Obushama governments trample human and privacy rights with their boots and as prudent blogger/investor I will not risk being locked up on ridiculous charges that are normally associated with totalitarian regimes and may yield many years in an inhumane prison system. I presume my critical blog constitutes what the US goons in uniform and the spies with ties may consider excessive opposition. i.e. “terror.”

    If you read my post “Growing Similarities Between US Government And Nazi Regime – A Historical Comparison”
    you and your readers will understand.

    My dad’s grandparents only survived WW2 because they fled to England before the war started. The rest of a 150-strong family perished in Auschwitz, Terezin KZs etc. so I have developed a very sharp sense what constitutes fascism.

    When I worked at Reuters in the 1990s the term “terrorist” was a no-no as one’s terrorist is another one’s freedom fighter. I am sad to see that Reuters has replaced the neutral term “guerrilla” with the emotion-laden “terrorist” since 9/11 when the birth of so many nations bases on guerrilla acts.

    Be it the USA, Israel, Romania and so many other countries: The beginning of their independence were marked by violent acts of guerrillas who acted according to John F. Kennedy’s famous quote, “Those who make peaceful revolution impossible will make violent revolution inevitable”, as they would have gotten nowhere otherwise.

    As an unpaid blogger I find more hard facts on the web in 2.5 hours than I could ever gain from the Treasury’s propaganda spin in the same time. This gets confirmed by your post when you state that you ended up with barely half a page of notes.

    I end with my statement that I see journalism as a profession and blogging as a passion. Only as a blogger I find that fulfillment of spreading the facts (mostly hidden in plain view) – spiced with my opinions and explanations of gobbledygook agency speak – which is completely absent in MSM save Bloomberg (no money for this advertisement for me!) but so abundant in online media.

    BTW, do you have a list of invitees? I am sure this would be of interest to all readers of this post.

    All the best and
    keep it coming the naked capitalism way!

    1. Psychoanalystus

      Wise words, indeed, my friend.

      I was curious as to why you chose to return to Austria. Do you not find (as I do) that the country is still highly xenophobic (if only covered up by a thin veneer of pacifism)?

      As a frequent flier between the US and Europe (and resident of both), I’ll say that the Nazi treatment at the hands of immigration officers has diminished considerably under Obama. Things are almost back to “normal” now. Yet, as a non-US citizen, you should be cautious. As a former employee of the Justice Dept, I will say that there are hundreds of thousands of foreigners serving cruel and unusually long sentences for minor offenses such as raising their voice at some illiterate TSA moron on some airport.

      Nonetheless, what you write about Fascism is cogent indeed, and undoubtedly the police state that the US has become under Bush is something to be concerned about. However, while I think your comparison to WW2 has validity, I would certainly not insult German efficiency of carrying out that war (and I’m referring only to pure combat, not to genocide) by comparing it to the sheer incompetence and stupidity of the US military.

      Are you in Vienna? I go there several times a year. Let’s have a cup of Wiener melange someday at Café Landtmann (Sigmund Freud’s favorite).


      1. The Prudent Investor

        PA, I never resided in the US, only visited twice: NY in 1985 (Palladium) and Washington (knocking at the Fed’s main entrance didn’t get me in) the week before 9/11.
        I am always happy to enjoy a Cafe in Landtmann. FInd my email in my blogger profile or tweet me @prudentinvestor a little ahead.
        Expect a heated argument though if you wanna go down the road on German efficiency. They were most efficient in losing the war and that’s about the only efficiency I attribute to them after working in Frankfurt for 3+ years in the last millennium.

    2. Doug Terpstra

      Thank you, TPI, for your biting comments and your own incisive blogsite.

      Your perception of fascism is well-informed, but the iron fist here is so far wrapped in a velvet glove. I suspect Yves warm and friendly bull session was an expample of that.

      It may have been softening up the ground for the regressive VAT tax, prior to embezzling the SS lockbox, but I wonder if the timing has anything to do with preempting a significant market “event” swirling in the rumorsphere: the Hindenburg Omen, the bottom falling out of housing (Radar Logic), or the implosion of still unresolved derivatives. It may well be part of the confidence game for which Timmy was willing to grace exemplary bloggers (except TPI) with an additional twenty precious minutes of his charming, fraternal company. When it hits the fan, at least we’ll know that even if “mistakes were made”, those responsible are really well-meaning, good-hearted, and sincere, so we shouldn’t immediately reach for the torches and pitchforks.

      1. i on the ball patriot

        Yes, thanks TPI.

        The propaganda bubble …

        The decision to shun or not to shun these meetings is an interesting one. That decision reveals to varying degrees the viewpoints of the individual making the decision, and in the end, is a function of the life’s experiences of each individual. But the conflict is very telling.

        Given the enormous global propaganda effort put forth by the wealthy ruling elite in the past forty plus years it is understandable that many would feel participation in this meeting was worthwhile. But it is also noteworthy how many are now seeing the intentional disingenuous involved here. I think the conflict is telling in that it represents the damned if you do, damned if you don’t, stage of the break down of trust brought on by ever more people realizing just how screwed they are now with their life’s savings and retirement benefits being diminished daily. It also represents a good size pin prick in the biggest global bubble of all. The propaganda bubble. The anger and resentment will be overwhelming when it finally bursts. I would not want to be in Geithner’s shoes. Forget the VAT. It will not be pretty.

        An “event” will surely happen. Seems to be a significant priming of the hateforprofitism pump going on right now with the stoking of the Obama choosing Christianity over Islam story. Is their a deranged Muslim Sirhan Sirhan in the wings with an inflamatory article in his pocket?

        Deception is the strongest political force on the planet.

  17. MichaelC

    Since I don’t think any of the bloggers benefit from this ‘access’, I don’t see much point wasting time analysing the motivations of either group. Seems like they’re toying with you. Maybe they’re signalling that you’re on their radar screen, maybe they hope to coopt some of you.

    Richard’s point about staying relevant at the periphery suggests these meetings do nothing to serve this crowd’s ends.

  18. The Prudent Investor

    I just want to add that I would have written largely the same as an answer to the Treasury but their invitation was so low key that I had deleted it unread upon arrival in my inbox, disregarding it as just another daily Treasury digest email.
    It would have caught my attention had the Treasury had the wits to write such keywords like bloggers or invitation in the subject line.

  19. EmilianoZ

    The Treasury didn’t have much luck with you because you’re a bunch of independent econobloggers. But they’ll also do a session for corporate econobloggers where they’ll invite people such as Felix Salmon or Megan McArdle. To his credit Salmon didn’t write a glowing review of his last meeting but McArdle did. I remember that nincompoop wrote something like: “I’m reassured because they have very smarts guys at the Treasury.”

    I hope Yves did an Elizabeth Warren on Geithner, made him squirm like a worm or squeal like a pig.

  20. Steve

    Unsubstantial answers that don’t really answer the question from officials at the treasury? Never!

    Seriously though, I don’t fully understand the criticism of meeting with them in the first place. As long as you objectively and independently review the information they provide, there is never anything wrong with hearing from someone who might have different views or be on the other team. Looking the enemy in the eye, or in this case, listening to what they have to say, can be a powerful tool to better understanding them.

    Of course, if it was largely unsubstantial and mostly used to push their agenda, I can certainly understand not going back again, but simply not meeting with them at all doesn’t seem like that great of an option.

    1. Yves Smith Post author

      You hit the nail on the head. I’m not keen re going, it takes a day out of my life (if I could get other meetings in DC, it seems like a different issue), yet there is the odd possibility that one might learn something (seeing Lee Sachs in the flesh last time was instructive, as was seeing how smooth and effective Geithner is in a small meeting format).

  21. angry anoner

    Treasury has done this before…

    They asked a bunch of Bond bloggers in Q4 2009 and gave them the “end of QE we are going to drain liquidity story”


    Yes it was a show… but to what purpose?

    My read on the 2009 Bond Blog meeting was, The Treasury wanted to “pitch” something subtle and see the reaction.
    I believe that they wanted to “test audience” the meme of removing liquidity intervention “quickly” vs “over time”.

    Frankly the bond bloggers were stepping all over each other to critique the fin reform or efforts to prop up economy and what not…

    The bloggers were so full of their “opportunity to lambast” that they NEVER actually asked “gee what does the Treasury want from us?”

    They wanted your gut reaction to something… that is what the rehearsed show was for. To set up a baseline and provide one tidbit different to judge reactions.

    Your meeting was probably about this: ” catfood commission might recommend changes in taxes, which in context might mean more consumption taxes, as in a VAT”

    New taxes is a BIG deal… probably means Treasury wants to keep taxes at Pre Bush tax cuts AND go for additional taxes

    So in effect a loose monetary tight fiscal stance… or ala Japan 1990s… egads

    BTW: It’s normal for you guys to get made fun of because you went to the meeting… happeded to the bond bloggers too.

    Yes you were right to go… but I wish for once someone in these meetings would simply realize that the Treasury is doing this for THEMSELVES not to give bloggers 15 min of fame.

  22. John F. Opie

    Just a quick note to the first comment:

    If the US were to implement a VAT, one aspect that most have not even considered is the effect on trade. All countries that have a VAT also apply it to all imports: hence if I import, anything from the US into Germany that has a declared value of more then $50 (the cut-off threshold for private imports), I have to pay the German import tax, which is the same as the VAT, in addition to any duties which are raised by customs.

    Imposing a VAT would bring massive complaints about protectionism, even though it’s basically the same as all other countries do. If you don’t impose an import tax, you basically give a huge tax break to imports, as you have just taxed only domestic producers punitively for producing domestically, further aiding the destruction of the US industrial base (but not creatively…).

    Otherwise: it sounds like the visit to the Fed was an exercise in futility that nonetheless needs to be done and followed up on to ensure that the invitation comes again. Again, an exercise in futility…

  23. Evoo Kermartin

    Yves, this beautifully written post is an important artifact of our times.

    The larger question is what is the role of “Blogger”? You may have the gravitas, telegenic appearance and experience to appear on TV, but most of your blogging colleagues do not. You may know the basics of journalistic techniques/ethics but your your blogging colleagues may or may not.

    Maybe Treasury looks at it as “Amateur Hour.” Blogging is not an organized phenomenon. It’s not an undergrad major (yet). No credentials, no professional standards. Quite anarchic, actually.

    Lacking gravitas, many or most bloggers will be star-struck, at least for a time. It’s not everyone’s dharma to have face time with senior Treasury officials and that’s … OK. And it’s not strictly necessary to effective and successful blogging, is it? Indeed, written responses to questions that can then be posted online might be a better and more natural way for bloggers to interact with power.

    Wonderful post. Thank you so much.

  24. anon

    It might have been constructive to reveal the actual purpose of the meeting. I find it difficult to believe there wasn’t a stated purpose for Treasury calling this second meeting. If so, you didn’t reveal it. It’s difficult to measure anything against an unstated objective.

    Apart from that, it reads as if your purpose in blogging on on the meeting is to paint the blogging “community” as the victims – of just about everything, it seems.

  25. Jim Haygood

    Gosh, couldn’t someone have put some basic questions to Geithner, such as:

    1. What are your plans for duration management?
    2. Are Treasurys in a Bubble?
    3. Do you still support a strong dollar?
    4. Any plans for exchange rate intervention?

    Y’all should have invited Tim to the watering hole afterward, to extract the real scoop from him.

  26. Nik Kondratieff


    I think there’s a rather simple explanation why Treasury does these grip and grins with y’all…they realize you actually have a lot of people who listen to what you have to say and they know what you have to say is (1) important (2) generally correct and (3) highly critical of their actions/policies. I doubt they think you’ll change overnight, but over the long haul, familiarity will soften your criticisms, so they’re making an investment in long term inventory–out of 7 of you, if they can get 1 or 2 to see things their way, it’s a win.

    Keep up the great insight and analysis and I have no doubt you’ll fall for their charms.


  27. jbmoore


    The simple explanation for the meeting is that your group was a practice session for Treasury’s Wednesday meeting with the professional journalist bloggers. Your group might ask tougher, more pointedly insightful questions than the journalists, but it gives Treasury officials a chance to correct any errors they make with your group and polish their presentation to the journalists which will reach more eyeballs through the traditional news outlets. It would also explain why the meeting was a waste of time for your group. It was solely for the benefit of Treasury.

  28. Hugh

    So you had a sit down with the officers of the Titanic and they told you what a nifty ship they had.

    Look there are only two kinds of people who work for this Administration, criminals and screw ups. Unemployment is horrendous and getting worse, so is housing. Their FinReg is an unfunny joke. State budgets are tanking. And even with the ZIRP stock and commodity bubbles have run their course and are at best going sideways. I think the real take home message is just how oblivious these guys are. This goes along with your post about the Boston Fed’s position that no one could have predicted the housing crack up. Excuse the language but these guys are first class fuck ups. They merely reinforce my view that we will hit the wall in 2011, although a shock could cause us to hit it anytime.

    Perhaps my analogy to the Titanic is misplaced. Maybe comparing them to the tsar’s ministers before the Revolution would be more appropriate. You know the “Don’t worry, Nick, we got this all under control.”

  29. Hugh

    Another thought if you ever get invited back, something I use when I run into these cocksure types who tell me I am all wet. I ask them to compare records. Did they see the housing bubble coming, did they predict the burst, how about the recession did they predict that back in the Fall of 2007, oil price spikes, did they see those, were they able to explain their dynamics, what about the meltdown, at the time we called it a house of cards, and kept up a running commentary on how many more cards went before the whole thing fell in, the TARP, we said the initial reverse auction wouldn’t work, and that the eventual loans were just a means to give a rationale to a program that had been touted as “do or die”, the stimulus, we said it was too small and poorly constructed to get us to recovery, at best it only got to almost even for a couple of months, now we see the deteriorating fundamentals reasserting themselves. Anyway after going through this list, I ask them how they did compared to myself and many others who did get these things right. Then I ask them why people like me who got these things right should listen to people like them who got it all wrong. I have found this will shut up the most vociferous critic faster and more completely than any argument or evidence I can lay before them.

    1. Evoo Kermartin

      Of course, that more or less begs the question as to why you bothered showing up to talk to them in the first place, doesn’t it, Hugh?

      Another approach is to wear a t-shirt with Uncle Sam pointing to the viewer in his famous “I Want You” pose with the subtitle, “I’m With Stupid.”

      1. Hugh

        It’s a choice. It’s about giving those the benefit of the doubt even though we are pretty sure where they are coming from, and, of course, it is about confronting them. They have power which they have criminally abused to harm us and the country. Nothing says we can’t use the opportunities given us to rub their faces in some unwelcome truths, as in comparing our records to theirs.

  30. KnotRP

    Most focus groups pay people to show up…seems naive to pay your own way, just to be sampled.

    1. Yves Smith Post author

      I thought of the focus group comparision too, but there are some gov’t rules that prohibit Treasury from paying for our travel, plus they let us drive the agenda, they simply took our questions.

  31. anon

    Felix wrote:

    “On Wednesday, there was another meeting, this time with professional, salaried bloggers … I half understand why Treasury makes the distinction between the two types of bloggers …”

    Any comment?

    1. Yves Smith Post author

      Mike Konczal had assumed the difference between the Wed meeting (which he knew about) and the Monday one was econobloggers v. political bloggers. The fact that Felix went to the the Wed meeting says his cut (prof v. non) means that is how Treasury is seeing it. We were told they were seeing Geithner too, but getting less time overall (presumably less with the staffers).

      Note this meeting was also the day after the GSE day, so they probably wanted to focus on that.

  32. Aunt Deb

    Thank you for taking the time to respond to my comment above, Yves. I realize I had no idea how the meeting was arranged or the spectrum of people invited. I do think that helping readers such as myself to think about these matters clearly and to argue for alternative policies cogently is a truly valuable consequence of your efforts, even if it is not the primary purpose of naked capitalism.

  33. ChrisPacific

    Thanks for the report. I don’t see any issue with attending these as long as you feel there is value to be gained by doing so. It may be more satisfying to stand on a soapbox and harangue the crowd, but in the real world problems don’t get solved except by communicating, and even if you’re pessimistic about the results it’s usually important to make the effort.

    Having followed your blog for a while, I don’t see much danger of you becoming a Geithner cheerleader just because of a little face time. Let’s face it, if they were really going to use the orbital mind control lasers on you they probably wouldn’t need to bring you to their offices in order to do it.

  34. Chris Vera

    Thanks for the writeup, wish it were a live CSPAN-type platform to ask the questions we really need answers from our gov’t about. It sounds like it was a high-five frat style informal get together.

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