This really was a great interview! George asked some really tough questions and of course, Tim Geithner, sidestepped them. I hope you will go to the article and read all the interview because it really gives a clear picture of what is going on. Tim Geithner is so easy to read!!
STEPHANOPOULOS: And some experts believe that we're really entering a brand new world. I was struck by a piece of research I saw from a branch of Citigroup. This was -- and I'm going to share it with our viewers.
They're saying, "Don't be in a state of denial, we are really entering a brand new economic world even after the recovery, because for so long the U.S. has been acting like a leveraged hedge fund."
And they go on to say: "Not only is the lifestyle and wealth creation likely to be unsustainable going forward, but if you believe, as we do, that we've been operating in a leveraged economy, then the new normal in terms of economic data, profitability of companies, et cetera, may be a shadow of the past."
So do Americans have to get used to the idea that the boom times really aren't coming back?
GEITHNER: Well, we're going to emerge out of this stronger. And we're going to do that because the president and the Congress are going to make sure that we have the government doing a better job of things it needs to do.
So we have a more productive economy in the future, better education outcomes, better health care system, better energy policies, stronger infrastructure.
STEPHANOPOULOS: Stronger, but as affluent as we were in the past?
So income inequality goes down?
It should go down.
Again, you know, if you look at the record of performance in the '90s, you know, we had very strong productivity growth during a period of fiscal discipline, fiscal responsibility, strong private investment, and the gains were shared much more broadly.
STEPHANOPOULOS: And you are obviously trying to do that with your plans to shore up the banking system. You laid out what to do about these legacy toxic assets in the banking system this week. And a lot of people are wondering, will it actually work? The stock market definitely seemed to like it, so did a lot of experts. As you know, the Nobel Prize-winning economist Paul Krugman was not a fan. And I want to show what he wrote this week in The New York Times.
He said when he read this plan, it gave him a sense of despair. And he went on to say: "Financial executives literally bet their banks on the belief that there was no housing bubble and the related belief that unprecedented levels of household debt were no problem. They lost that bet and no amount of financial hocus-pocus, for that is what the Geithner plan amounts to, will change that fact."
STEPHANOPOULOS: But one of the things you're hearing from the banks is in part because they don't want all of these new restrictions, they may not sell these legacy assets.
GEITHNER: That is a risk. And it's very important that people recognize that.
To get out of this, we need banks to take a chance on businesses, to take risk again. We had a long period where banks were taking too much risk. The challenge for us is that they take too little now.