Analysis: Introduction of the Financial Stability Plan by Secretary Geithner, Pt 1

Author’s Note: This essay is an analysis of the Treasury Secretary’s Speech delivered on February 10, 2009. The full transcript is available here. I encourage everyone to read it in its entirety. I have chosen to examine Geithner’s speech on this issue rather than President Obama’s own words in order to avoid accusations of unfairly criticizing a man who admittedly is not an expert in financial matters. On the topic of the Financial Crisis/Stability Plan President Obama simply plays the role of Lenin’s “Useful Idiot”. (Or the role of Orwell’s sheep in Animal Farm). Geithner, however, plays a much more sinister, but no less pathetic, role; Secretary Geithner’s words are deeply rooted in deceit and hidden agendas rather than ignorance. (Characterized by Orwell’s Squealer). Furthermore and more importantly, Secretary Geithner’s existence transcends any partisan origin. Any discussion (or mention) of Democrat/Republican or Left/Right politics clouds the issue at hand. Politicians are what they are…nothing...their power is imaginary.

At its core, Geithner’s statement is simply an example of the “Begging the Question” fallacy. This example is made more complex by a series of embedded BtQ fallacies and strawmen; not to mention factual inaccuracies. However, this essay is not concerned with the factual accuracy of Geithner’s various words, rather the structure of his statement. All facts cited by Geithner will be assumed to be true. His fatal flaw lies in the unsound and invalid logic of the entire statement. The result is anything but coherent. Based on the Secretary’s logic, the plan necessarily cannot succeed.

Let’s start with Geithner’s framing of the cause→problem→solution. The cause was a “credit boom” followed by the problem of tightening of credit, resulting in the inability of many parties to get needed credit. The solution is for the government to provide credit that the market is not willing to provide. So, essentially lack-of-credit (problem) fixed by non-lack-of-credit (solution). This argument takes the form of: A is true. Therefore not A is not true. This illustrates a begging the question fallacy; the truth of the conclusion is assumed in the premise. The Secretary’s main premise (of the plan) rests on this fallacy, demonstrated with his statement: “The credit markets that are essential for small businesses and consumers are not working.” Meaning, Geithner identifies the tightening/freezing of credit as a non-functioning credit market. Tragically, this misstep undermines the structure of the entire statement. The government’s key to fixing the economic crisis is to restore the flow of credit.

Next, Geithner describes five principals that will shape the government strategy. Keep in mind that these principals are all based on the flawed premise described above, so they are all very weak. Let’s examine a few of this in detail. The first in its entirety states: “We believe that the policy response has to be comprehensive, and forceful. There is more risk and greater cost in gradualism than in aggressive action.” This, of course, is a false dilemma. The dilemma presented, gradualism v. aggressive action, distorts the actu….. I’m going to stop writing at this point as the rest of my analysis seems redundant. The Secretary’s speech illustrates the point-of-view that the economic crisis can only be solved by government action. This underscores the actual problem that the irrational Keynesian view of economics saturates nearly all politicians, left and right, and all mainstream economists.

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