Careless Whispers

So last week, we had a bit of a circus in which Patterico and Jeff Goldstein (whose tone risks making me kind of sad to have defended him so strongly at other times) went at it over the reaction to Rush Limbaugh’s “Obama Fail” comment.

As noted, it was pretty clear that Limbaugh’s statement was partisan but innocuous, and also clear that it became a nifty sound bite to the Democratic media strategists who promptly plated it with lead and tried to hang it around Limbaugh’s neck.

The issue under debate was whether Limbaugh took any blame for speaking in a way that left him open to that kind of attack.

More recently, we’ve seen a (much more serious) example of the same thing, in which Tim Geithner was asked about the Chinese proposal to move away from dollar-denominated world trade to a “basket” (which had been variously interpreted as a new pseudocurrency and a simple extension of the existing IMF SDRs.

Geithner gave a kind of mealy-mouthed response when asked about this – emphasizing his regard for his Chinese counterpart, and saying that many things should be considered.
Here’re his quotes with commentary by James Joyner:

Q Well, thank you. Wonder if you could comment on two related things. One, the Chinese government proposal about a global currency; and about the IMF regulations that were — the new IMF idea about, you know, very general agreements to borrow and having a faster ability to disburse to the (margin ?) markets…

SEC. GEITHNER: On the first question, I haven’t read the governor’s proposal. He’s a remarkably — a very thoughtful, very careful, distinguished central banker. Generally find him sensible on every issue. But as I understand his proposal, it’s a proposal designed to increase the use of the IMF’s special drawing rights. And we’re actually quite open to that suggestion. But you should think of it as rather evolutionary, building on the current architectures, than — rather than — rather than moving us to global monetary union.

Moderator Roger Altman, James reports, “immediately recognized that Geithner had slipped off the deck and was a man overboard, at least when it came to U.S. dollar policy. Altman tried to throw Geithner a lifeline.”

MR. ALTMAN: Let me just follow that up for one second. A number — I haven’t read the governor’s essay, either, but a slew of news reports interpreted his comments to suggest that the world needs a super reserve currency, and that the dollar, on some gradual basis, ought to be replaced in favor of that. And I wasn’t entirely clear what your response was.

SEC. GEITHNER: Well, as I said, I haven’t read his proposal, but I thought the initial reaction was sort of ahead of the details of the proposal I saw. The only thing concrete I saw was a reference to expanding the use of the SDR, but I look forward to reading his figures. As I said, I have tremendous respect for him. He’s a really thoughtful, pragmatic guy, and he has a great record of credibility in China as a whole, so anything he’s — he’s thinking about deserves some consideration.

It is very important just to underscore that the future evolution of the dollar’s role in the system depends really primarily on how effective we are in the United States in getting not just recovery back on track, our financial system repaired, but we get our fiscal position back to the point where people will judge it as sustainable over time.

After much back-and-forth, Geithner eventually allowed as to how “I think the dollar remains the world’s dominant reserve currency. I think that’s likely to continue for a long period of time.”

So let’s go back to the original argument. Is what matters Geither’s intentions when he spoke? Because the markets certainly didn’t see it that way.

Ambrose Evans-Pritchard, writing for The Telegraph, reports that, “The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens.”

David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance. “The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation,” he said.

Mr Geithner later qualified his remarks, insisting that the dollar would remain the “world’s dominant reserve currency … for a long period of time” but the seeds of doubt have been sown.

The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar. “I don’t believe that there is a need for a global currency. The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world,” he said.

Words matter, and the plain meaning people reading or listening attach to them – regardless of what the author had in mind when writing or speaking – change their views and behavior. That’s why people who speak in the public sphere are held to a higher standard (which in the case of Joe Biden, is somehow often overlooked…).

Geithner stepped in it, and the financial markets are making him and the people he speaks for (us) pay. Limbaugh stepped in it as well, and the political markets reacted similarly…or at least it sure seems like you could use today’s events to make that argument a little more strongly.

7 thoughts on “Careless Whispers”

  1. You keep insisting that those who believe in authorial intent want readers to deploy some sort of mind reading to determine what the author intended to say. That’s a complete and total strawman.

    We just want people to apply a plain and simple common sense, good faith reading of the author’s words to derive what he is saying and react to that. The words mean what they say, not what the author later claims they meant to say, and certainly not what the reader would like them to say. The meaning is self defined in other words, not to be overwritten and injected with new meaning by the readers for their own purposes.

    You admit a plain and common sense reading of Rush’s comments indicate that the attacks on him were bogus. You admit a plain and common sense reading of Geithner’s comments indicate a lot of ambiguity about the future role of the dollar and that the market is uncertainty is justified.

    Also, who’s saying that words don’t have consequences? Rush’s words certainly had consequences. That doesn’t make the attacks against him RIGHT either. I sincerely hope you find using a deliberately truncated version of someone’s statement as a club to beat them with ethically dubious at best.

    I found it particularly infuriating that so many just seem to shrug and say that he deserved it. Politics may well be like boxing, and people who step into the ring should expect to get hit. But boxing has rules, lest it turn into nothing more than a back alley brawl, with people pulling out the knives.

    I think using people’s statements against them is fair play, using intentionally misstated versions of people’s sayings against them is below the belt. Since you, and it seems most others as well, disagree than hitting below the belt is now a legitimate tactic and the only answer is to escalate back.

  2. Since you, and it seems most others as well, disagree than hitting below the belt is now a legitimate tactic and the only answer is to escalate back.

    Doh, should read agree that hitting below the belt is now a legitimate tactic than the only answer is to escalate.

  3. The Chinese have used a “basket of currencies” for at least five years. The movements of the Chinese Yuan is pegged to this basket. In the past, the basket had a lot of dollars in there, which is why the Yuan has closely followed the movement of the dollar.

    In response to Americans, who want the dollars to go down, and because the Chinese want to diversify their own risks, they have decreased the dollar portion of the basket. This is how the Yuan has been slowly appreciating against the dollar. It used to be an 8:1 ratio of Yuan:Dollar. Now it’s 6.8:1

    The exact composition of the currency basket is not public/popular information, but I’d imagine that it matches the world market conditions fairly closely. Chinese economists do not want the Yuan to be too divorced from market realities.

  4. Oh, and clueless reporters who have no sense of history then treat this information as “Breaking News”. Geithner was probably confused by how reporters are dealing with this info.

    Reporters should be made to read and memorize their own news.

  5. Marc, I’m extremely sympathetic to your general thrust here, and I spend a lot of time ruminating on the semiotics of global politics, local politics, staff meetings, bar room conversations, fictional interpretation, etc.

    Far more time than is healthy for an engineer, I might add.

    Even so, I’m having a hard time agreeing with you on the specifics of either case (although because I’m a hell of a lot more interested in Geithner than in Limbaugh, I said nothing before.) Consider that Geithner may have had a reason for downplaying his comments and being generally cagey– like not wanting to punch the Chinese in the face by saying, “Hell, no, that’ll never happen, and their proposal is ludicrous.” (Which in fact it is; just saying that he hadn’t read it was a show of disrespect, I think.)

    Had he done that, he’d be getting savaged by the crowd that thinks this Administration is completely diplomatically incompetent.

    I’m not convinced there was anything Geithner could have said that could not have been construed as a blunder by someone.

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