It should not have been a surprise that US Treasury Secretary Timothy Geithner veered between fits of laughter and a tone of chilling gravity when he spoke to the Council on Foreign Relations in Washington this week.
Timothy Geithner veered between fits of laughter and a tone of chilling gravity when he spoke to the Council on Foreign Relations in Washington this week. Photo: AFP
3:26PM BST 14 Jun 2012
The only member of President Barack Obama’s original economic team still in office, Geithner must surely have a full-blown case of crisis fatigue. When he became the 75th Treasury Secretary in early 2009, the epicentre of the crisis was on Wall Street and rippling out with devastating effect across the rest of America. As he embarks on his final five months – Geithner has said he is quitting even if Obama wins another four years in the White House – the darkest clouds are coming from across the Atlantic.
Although Europe is not causing the sharp gyrations in US stock markets that it did in the late summer and early autumn, there is evidence that it is again eroding the confidence of American businesses and consumers. Retail sales fell for a second month in May, in a worrying sign that consumers are themselves starting to respond to indications that the economy is losing momentum.
Forecasters have already scaled back hopes for US exports because of Europe’s woes. Economists at Morgan Stanley, for example, predict exports will climb just 3pc this quarter compared with an original expectation of 8pc.
Geithner told his audience that European governments are constantly turning to policymakers in the US for ideas and suggestions on how to extinguish the immediate financial fires on the Continent while at the same time moving the 17 countries in the Eurozone towards closer political and economic union.
The latter challenge might have been better addressed by Alexander Hamilton, the first Treasury Secretary and one of Geithner’s most illustrious predecessors. Hamilton, who died in a pistol duel in 1804, is credited with equipping America’s earliest government with central taxing and spending powers.
The chief advice of the current incumbent of the vast Treasury building in Washington to his European counterparts is to stay ahead of financial markets and act boldly. Geithner is drawing on the first months of the Obama administration, when all the country’s major banks were forced to take an injection of capital from the US taxpayer to shore up confidence in the financial system. But it is easier to act boldly when there is a single fiscal authority – something every Treasury Secretary has, more or less, enjoyed since Hamilton.
As it is, the headwinds from Europe, alongside the still slow recovery here, risk putting Obama and Geithner permanently on the political back foot with the election five months away.
Click Here to continue reading.
- Geithner Pleads With Europe To Pass EuroTARP, Obama Wants HARP 2.0+ Passed (confoundedinterest.wordpress.com)
- Geithner calls for more detail from Europe leaders (news.yahoo.com)
- Geithner Not Worried about Dearth of Wall Street Donations (usnews.com)
- Be Afraid Europe, Be Very Afraid – Tim Geithner Is Now “Helping” You (jhaines6.wordpress.com)
- Geithner: Europe will hold it together (buzz.money.cnn.com)
- US’s Geithner: Europe To Do Whatever Is Necessary To Keep EMU (forexlive.com)
- Geithner Says Fiscal Debate Began, Will End With Simpson-Bowles (usnews.com)