Geithner-Summers Tag Team Op-Ed

In an op-ed piece published in tomorrow’s The Wall Street Journal, U.S. Treasury Secretary Tim Geithner and Director of the National Economic Council Larry Summers clearly indicate the worst is over for the economy, since they take a tremendous amount of credit for the manipulated recovery that has occurred to date. They write:

Thanks to strong, decisive and coordinated action, President Obama and the other G-20 leaders have achieved significant progress since the London meeting. The global economy, which was then contracting at an unprecedented rate, is now expanding, and world trade has increased by more than 20% over the last 15 months.

This turnaround has been especially dramatic in the United States. At the time of the London summit, the U.S. economy was shrinking at an annual rate of 6%. Now it is growing at a rate in excess of 3%—the largest swing in U.S. growth in 50 years.

At the start of last year, the U.S. was losing more than 700,000 jobs a month, and today the private sector is generating new jobs. Recovery was only possible because we took action to repair our financial system, driving down borrowing costs for homeowners, consumers and businesses, and put in place the Recovery Act, which increased demand by cutting taxes for families, helping unemployed workers, and investing in public infrastructure.

Among the points they fail to mention is that the jobs number has been manipulated upward by census hires, which appear at least in some cases to be counted as hires 2, 3 or 4 times, and in any case are just short-term work.

As for the housing sector, the manipulated housing upward push is over. Indeed analyst Meredith Whitney argues that a double-dip in housing is upon us.

Basically, all Geithner and Summers can hope to achieve at the upcoming G-20 is a patch job that may have a half-life of weeks, if not days. There are too many holes in the dike and it's all going to come tumbling down, in the not too distant future.

The full Op-Ed is in the EPJ Vault, here.