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Treasury Secretary Timothy Geithner huddled with reporters Wednesday before he flew off to Korea for a meeting of global finance ministers and central bankers. Here's 10 points he made during the briefing.
1) On global rebalancing: global leaders must make “sure we reaffirm our commitment to the broader global rebalancing agenda?because we all face this basic reality where the U.S. consumer, the U.S. economy is not going to be as large a source of potential growth for the world as it was in the past, because we're going to be saving more. More growth in the United States is going to come from investment, the world needs to rebalance so that future growth comes from domestic demand in those countries outside the United States.”
2) On financial overhaul: “The House and the Senate are on the verge of passing the most sweeping financial reforms than we've considered in generations?reforms that will meet all the G20 principles that we agreed to I think ahead of any other major economy.”
3) Three areas where there needs to be a global consensus for reform: 1) transparency and disclosure in the financial system, 2) derivatives regulation, 3) capital, liquidity, leverage rules.
4) On a transition period for new capital rules: “It is perfectly reasonable to use transition periods to make it easier for countries to adjust to what we believe should be substantially more demanding, more ambitious set of constraints on leverage. That's responsible policy and I'm perfectly comfortable with us negotiating reasonable transition period to help make people more comfortable that they can live with those new standards.”
5) On countries having different views on global capital standards: “We do come to this from differing starting points, and there will be different challenges in meeting these new standards, but I think we all have an interest in bringing clarity to what the rules of the game will be in the future. I think that will be helpful to the objectives of recovery.”
6) On the effectiveness of global commitment to recovery: “Early last year we came to the G20 with a plan to break the momentum of this financial crisis, restore growth, repair our financial system and agree on a framework for fixing the global financial system. That basic plan has been remarkably effective in restoring growth.”
7) On the global bank levy proposals: “I don't think we're on the verge of a global consensus on a bank levy yet. I do think there's still very broad support in Europe in particular?for putting in place a financial fee on designs very similar to what we've proposed in the United States. But there's not universal support for that across the G20, at least at this stage. And I don't think that's going to change in Korea.”
8) On stress testing European banks: “I think the Europeans have laid out a very strong very comprehensive program of policy reforms and financial support to help countries in Europe manage through these tensions and pressures. I think they absolutely have the capacity to meet those commitments. It's not about the ability. They've made it clear they have the political will to provide that financial support. I do think in general as I said on the financial reform priorities that there's a very good case for trying to bring more transparency and disclosure to these markets and the major financial institutions, and I think there's broad support in Europe for doing that. It reflects a basic reality ?uncertainty has a price, and you can reduce uncertainty if you improve transparency and disclosure.”
9) On news about American International Group’s subsidiary deal falling apart: “AIG is now free to pursue a bunch of other options to help maximize the return, reduce any risk of loss to taxpayers. they've got a very strong management team, much stronger board in place making incredibly impressive progress frankly in restructuring that entity?putting us in a position where we can, how should I say, maximize the return to taxpayers as a whole.”
10) On global commitment to growth: “On the growth side is it's important to us of course for countries to stand together and commit to continue to act to reinforce this global recovery to strengthen this global recovery to safeguard and secure this global recovery. Part of that is about making sure we're putting in place the longer term reforms that will raise growth rates in the future. You see us doing that in the United States now with reforms to education and health care, financial reform,” etc.
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Yes Europe..just do what we say not as we do. See we have this thing called the reserve currency and since we all corrupted the system 100 years ago with modern central banks and then got rid of that pesky thing called the gold standard and outlawed competiing currencies internally…well let’s just say..we can print as much money as we want in the US and you can all pound sand…who the heck wants a Euro when we all know you can pay any of the debt back except with more printing…and you can’t cut your welfare state..no way the public sector elites would allow that…they would lose their power base…so listen up you Greeks..start to cut those bloated state funded unproductive industries and govt programs…
We Internationalists (do you really think Bernanke or Geither actually consider themselves Americans?) over here will line our pockets and enrich the banking class and our public elites..and there isn’t anything old Europe can do about it..hey you guys asked for this when you started your path to distruction with your first world war…and your welfare state…
yeah China will probably eclipse the US someday…but baby..in the long run we are all dead…and right now its good to be the reserve currency….
Does Geithner have anything to say about the US economy or is his focus strictly on how to integrate the US economy into the global morasse?
Real Time Economics offers exclusive news, analysis and commentary on the economy, Federal Reserve policy and economics. The Wall Street Journal’s Phil Izzo and Sudeep Reddy are the lead writers, with contributions from other Journal reporters and editors. Send news items, comments and questions to realtimeeconomics@wsj.com.
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