PALO ALTO (BCN) — U.S. Secretary of Treasury Timothy Geithner said at a Palo Alto talk Monday that bank and government officials made catastrophic mistakes with the economy, but that it is slowly healing.
“It was absolutely essential as we put out the financial fire that we change the basic rules of the game in which institutions operate,” he said, adding that investing in public programs was one way of accomplishing that goal.
KCBS’ Mike Colgan Reports:
One public project that could create jobs for the manufacturing industry—which has been hit particularly hard by the recession—is California’s high-speed rail project, Geithner said.
The project has been controversial on the Peninsula, where high-speed trains will travel along Caltrain right-of-way.
“It has the benefit of getting some of the people hardest hit by the recession, people manufacturing autos and construction, back to work more quickly,” he said.
The cost has been estimated at more than $40 billion, but Geithner said that would likely be money well spent.
“Investment in public infrastructure, in transportation, is a very good investment,” he said. “It’s a very good strategy in the near term. It’s very good for growth.”
Geithner spoke to more than 70 Bay Area residents Monday afternoon at the Oshman Family Jewish Community Center at 3921 Fabian Way.
Many attendees of the event doubted that recent economic policies have had any effect on their day-to-day lives.
“The secretary had competent answers, but they don’t seem to show up in U.S. policies,” Aaron Gershenberg, a managing partner at a Palo Alto-based financial firm, said.
Elaine Desser, a Palo Alto resident who attended the talk, said, “They need to change the rules of the Legislature. To pass any measure, you need two-thirds vote. It’s just impossible.”
Geithner acknowledged difficulties experienced by U.S. citizens, including an unemployed 35-year-old worker in the auto industry in Michigan.
“This crisis has been incredibly devastating. It’s touched the basic fabric of our country like nothing we’ve seen since the Great Depression,” he said. “So that unemployed auto worker is in a situation like many people in construction and lots of other parts of manufacturing.”
He said repairing the U.S. economy will take a long time, and that there is no easy quick fix.
Geithner also discussed his knowledge of economic models in other countries, including certain models in Asia that economists in the U.S. have avoided following.
“Nobody would look at Japan today and say that we would have been better off as a country if we adapted basic features of their model in 1982,” he said.
Other issues discussed included the value of the U.S. dollar to international markets, economies in China and Germany, and the importance of education and research in improving the U.S. economy.
Geithner said the country “can do a lot better” on investing in science, research and education, including at the university level.
The event was hosted by the Commonwealth Club.
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