One of President Obama's more inexplicable decisions was his choice of Timonthy Geithner for Treasury Secretary. About the only thing recommending him was the fact that he spoke Chinese, having been partly educated in China. His incompetence was breathtaking:
- In a January 2007 speech to the Council on Foreign Relations, he did not see the October 2008 financial crisis coming. In fact he said, "Improvements to risk management and to capital cushions are likely to have made the financial system more stable and more resilient."
- When he was at the New York Fed he was part of the disastrous decision to close Lehman Brothers without protecting its creditors.
Now, according to Wikileaks cables, he possibly leaned on U.S. regulators to rule in favor of the Chinese government in June 2009. Here's a selection from the Reuters report:
In June, 2009, the head of China's powerful sovereign wealth fund met with Geithner and requested that he lean on regulators at the U.S. Federal Reserve to speed up the approval of its $1.2 billion investment in Morgan Stanley, according to the cables, which were provided to Reuters by a third party.
Although the cables do not mention if Geithner took any action, China's deal to buy Morgan Stanley shares was announced the very next day.
I cannot think of any way that President Obama could have come up with a more China-friendly set of top economic advisors than the ones he picked (Geithner, Summers and Sperling). He had the top experts of the Democratic mainstream at his beck and call including top financial expert Warren Buffett, top business economist Ralph Gomory, and top international economist Paul Krugman. Instead he picked someone who had been proving his incompetency and who may have been willing to do the bidding of the Chinese government.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.