Streetwise Professor

September 17, 2011

The Dangerfield Zone

Filed under: Economics,Financial Crisis II,Politics — The Professor @ 8:26 am

Felix Salmon heard the big raspberry that the Euro FinMins blew at Geithner, which is good: other coverage (like in the WSJ) downplayed the Eurodis (the FT at least alluded to it).   But then Felix writes this:

It’s pretty clear, here, that in the wake of the debt-ceiling debacle Geithner has lost a significant amount of international heft.

Wrong, wrong, wrong.  The debt-ceiling debacle has absolutely nothing–zip, nada, zero–to do with Timmy!’s lack of “international heft.”  I wrote three posts in June alone remarking on the astounding lack of respect Geithner gets overseas, and those posts referred to even earlier episodes in which various Euros (notably the Germans) had given Timmy! the backs of their hands.  All of these episodes occurred before the debt-ceiling standoff crescendoed in July and August.   No, Timmy! had entered the Dangerfield Zone well before the debt-ceiling circus.

Salmon’s interpretation is a piece with the standard left-leaning narrative that it was the failure to raise the debt ceiling expeditiously, rather than the failure to deal with debt period, that is the main symptom of American political dysfunction.   The debt-ceiling battle pitted those who believe that business as usual can work against those who believe that it can’t, and that the time to change course fundamentally is alarmingly short.  At present, neither side has a decisive advantage, hence the standoff and subsequent cold war.  It’s the issue that will dominate the next election.

No doubt Timmy!’s (and Obama’s) political impotence during the ceiling standoff makes his lecturing them on the need to be decisive now even more galling to the Euros.  But his stature was already sub-Lilliputian well before he rode his limo to the Polish concert hall where the meeting with the merely Lilliputian FinMins (who arrived by bus) occurred.

The thing about the Dangerfield Zone is that it’s a helluva lot easier to get in than get out.  It’s hard, in fact, to think of an example of someone truly emerging. Which means that we’re stuck with a SecTreas that can’t get no respect during a time of an existential world economic crisis.

Although there is a dark humor to the entire spectacle, it is in fact truly serious.  Financial Crisis II is a truly international event.  Its epicenter is Europe, but a Euroimplosion would suck in everyone, not least the US.  Hence, it is deeply troubling that the American point man is disliked, disdained, and disrespected around the world, and especially in Europe.

Pace Lincoln, changing horses in midstream is usually something to be avoided.  But if the horse you are on has no chance of making it, changing is the best of bad alternatives.  This is unlikely to happen, though, given Geithner’s close relationship with Obama, who needs all the friends he can get.  What is truly depressing, though, is the realization that no one with the requisite standing comes to mind as a replacement.  Which means that the entire country is on the verge of the Dangerfield Zone.

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  1. I Hate Putin!

    Russia will not financially fall into Our hands in 2011.

    “ST. PETERSBURG, Russia (Dow Jones)–Russian Finance Ministry has narrowed its budget deficit forecasts for years to come and sees balanced budgets both in 2011 and 2015, Finance Minister Alexei Kudrin said Saturday, adding that he expects institutional reforms to pick up after the 2012 presidential elections.

    He also said that due to a balanced budget, Russia will borrow less in 2011–1.4 trillion rubles from RUB1.7 trillion ($46.9 billion) envisaged earlier. Russia is not planning to borrow from foreign markets this year.

    Speaking at a meeting of Leontief Centre think tank, Kudrin said higher revenues from oil and the nonenergy related part of the economy will help Russia to have a zero budget deficit this year. The ministry expected budget deficit to be 1.3% of gross domestic product in July.

    According to Kudrin, the budget deficit is expected to be 1.5% of GDP in 2012, 1.6% of the GDP in 2013, 0.7% of the GDP in 2014 and zero in 2015.

    -By Alexander Kolyandr, Dow Jones Newswires; [email protected]

    Our rebellious servant Vladimir faced the total economic collapse of his ramshackle economy, as detailed in your many fine posts, my good Professor. We entertained high hopes of having Russian assets return to Us in 2008-2009. Alas, it did not materialize.

    Comment by a — September 17, 2011 @ 1:56 pm

  2. Angelo Codevilla was right — Geithner’s main qualification is that he knows about the ‘community organizers’ CIA past. Gethner’s Mom worked for Obama’s Agency banker grandma.

    Comment by Mr. X — September 17, 2011 @ 6:09 pm

  3. a — keep speaking for the transnationalist globalist banksters that hate Russian sovereignty almost as much as they hate American sovereignty and wish to place both nations into absolute bondage. Maybe SWP will wake up and realize folks like Soros and all his anti-Russia front orgs are not his friends simply because they slam Putin and ‘Putinism’ and long for a Russian Obama they can totally control.

    Comment by Mr. X — September 17, 2011 @ 6:11 pm

  4. “keep speaking for the transnationalist globalist banksters that hate Russian sovereignty almost as much as they hate American sovereignty and wish to place both nations into absolute bondage.”

    One thing has me confused. Latvia is in Our power, and enjoys Our benevolent governance. They have demonstrated commendible wage flexibility, which We value above all, and their policy has drawn favorable comment in the Wall Street Journal and the Washington Post.

    And yet, Latvians are leaving Latvia at the rate of over 0.1% per month, despite enjoying Our beneficence. They leave either for that land from which no traveler returns, or for other countries where Our power is less.

    Do they not know that debt bondage to Us is the new order of the ages?

    Comment by a — September 17, 2011 @ 9:07 pm

  5. However, you are mistaken about one point, Mr. X.

    Our faithful servants Ronald, George, George, and Barack have placed the American people firmly in Our hands. And even Our philandering servant William played his part, though far to much of the gains of productivity growth was wasted on wages when he was in office.

    Because of Vladimir, the Russian people still elude Our grasp. Our faithful servant Boris misjudged him, alas.

    Comment by a — September 17, 2011 @ 9:15 pm

  6. All this talk about budget deficit in the country where Our servant can build a billion-dollar dacha unaccounted for is a red herring for the credulous Russkies. What really counts is that Our servant Vladimir has already succeeded in plunging Russia into the second industrial recession in less than 3 years, ensuring that the oil we need is not consumed in that God-forsaken territory he was appointed to govern on Our behalf. Sehr gut, Woldemar!

    Comment by Ivan — September 18, 2011 @ 5:10 am

  7. Ivan has seen Our plan. We have driven most of the world into depression, and their assets are concentrated more and more in Our hands. Russia and China will follow. Their resistance is formidable, but with Russia accounting for about 2.5% of global GNP, and China less than 10%, it is also hopeless.

    Ivan, though, is foolish to believe that mere billions interest Us. The magnitude of Our interests run into the hundreds of trillions.

    The achievement of Our will be facilitated if the Chinese and Russian governments can be induced to bail out the Euro zone.

    Comment by a — September 18, 2011 @ 6:01 am

  8. a — Oceania has always been at war with Eurasia and allied with Eur…er, Eastasia!

    Comment by Mr. X — September 18, 2011 @ 7:48 pm

  9. But of course, the mere billions is the trifles we throw to our loyal servant Vladimir and his fellow cleptocrats for executing Our Plan diligently.

    Comment by Ivan — September 18, 2011 @ 11:03 pm

  10. “But of course, the mere billions is the trifles we throw to our loyal servant Vladimir and his fellow cleptocrats for executing Our Plan diligently.”

    We only wish that were true, alas. Our program embodies Our two eternal principles “All for Ourselves and nothing for other people.” and “In a depression, assets return to their rightful owners.” Sad to say, Our rebellious servant Vladimir persists in raising wages and pensions, diverting these funds from Us. Russia pays only about 3% of GNP in debt service to Us. Contrast this with our truly dutiful servants in Latvia, where wages have declined about 30% and nearly 30% of GNP is paid to Us to service Latvia’s foreign debt. In the United States, for instance, in October 2008 Our assiduous servant George gave Us the Troubled Asset Relief Program, which amounted to $259.8 billion. Later, Citigroup alone was given an asset guarantee totaling $301 billion. By contrast, Russia’s assets are not in Our hands, though we bend every effort to overcoming his skilled, but eventually, hopeless, resistance to Us.

    Comment by a — September 19, 2011 @ 12:38 am

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