Paper Soldiers by Saleha Mohsin

Author:Saleha Mohsin [Mohsin, Saleha]
Language: eng
Format: epub
Publisher: Penguin Publishing Group
Published: 2024-03-19T00:00:00+00:00

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All eyes were on the new American administration to lead the world out of the crisis. Obama had vowed to do whatever it took to counter the worst economic crisis since the Great Depression, with an $850 billion tax cut and spending boost the centerpiece of his plan. When Geithner took the job, he was pretty sure that it was a no-win situation for him—after all, he was signing up to be the face of the most unpopular economic rescue efforts the government would launch in almost a century. His tenure was filled with what he later described as “communications failures,” foreshadowed by his now-notorious Cash Room speech.

While the withering punditry that followed the speech was savage (one commentator said he looked like a shoplifter), Geithner was equally as tough on himself. In his memoir, using his characteristic bald language, he said his speech “sucked” and that he had “botched the theater.”

It was a lengthy fall from the stature he came in with. Wall Street had expected Geithner to be a savior, rewarding the forty-seven-year-old with a 6.3 percent boost in the S&P 500 when his nomination was first announced three days before Thanksgiving in 2008. He was described as a “boyish technocrat” who had won confidence in 2007 and 2008 working as head of the Federal Reserve Bank of New York, when in tandem with Hank Paulson and the Federal Reserve chair Ben Bernanke he spearheaded the rescue of Bear Stearns and the government takeover of insurance giant AIG.

Geithner was no stranger to Washington, either, having worked at the International Monetary Fund and the Treasury department under Bob Rubin, when he helped create the strong dollar mantra. He had also studied Japanese and Chinese, and had lived in East Africa, India, Thailand, China, and Japan.

But that morning in February 2009 was what happens when a Treasury chief can’t match the moment. The man or woman charged with the stewardship of the dollar needs to inspire calm and confidence, convey prowess and control. As Bob Rubin put it, “Having somebody who is viewed as possessing some measure of credibility with respect to markets and economic matters speak in a calm and thoughtful fashion . . . probably does contribute positively to the psychology of a volatile situation.” Take, for example, October 27, 1997. Investors, jittery over developments in Asian currencies, had driven down U.S. stocks to a level that alarmed policymakers, with the Dow Jones Industrial Average falling more than 7 percent, a record under the trading volumes that day. Taking advantage of the majestic setting right outside his office, Rubin invited a gaggle of reporters to the front steps of the Treasury department (with the White House visible just to the right) and issued a terse 150-word statement that sought to calm investors. With Buddha-like composure, he told the world: We know it’s wild out there, but we looked into the plumbing of financial markets and everything is working just fine. We’ll keep an eye on markets, but rest assured the U.

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