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« Sherman To Geithner: Can We Tell America Today That Capitalism Is Back?..Mr. Secretary, Please Answer The Question (Clip) | Main | Bernanke And Greenspan Missed The Housing Bubble But This Cartoonist Saw It all Coming »
Wednesday
Jul152009

Fareed Zakaria Interviews Tim Geithner (GPS Clip)

Interview was broadcast Sunday (July 12).  Zakaria is outstanding.  This is so much better than Erin Burnett or Steve Liesman performed in their respective chances.  Zakaria interrupts him; holds him to the question; controls the environment exactly as a competent journalist should.  There's no glad-handing or nervous laughter.  Geithner can talk a line of Bull Shite from here to Texas, in his fracking sleep no less.  He's more talking point focused than anyone I've ever seen.

I've got a partial transcript inside.

Watch.

On Fed Chairman Ben Bernanke:

FAREED ZAKARIA, HOST, FAREED ZAKARIA GPS: So you need a good fed chairman. Do you have any ideas?

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: We have an excellent fed chairman right now he is doing a terrific job and I think that this is important to underscore I think that what the Fed did in this crisis, which was without precedent, subject to enormous controversy, and important for people to look back over time and evaluate those judgments, was what the Fed did during this period was absolutely essential and helped stave off a much more catastrophic outcome.

I think what the fed did was not just essential but extraordinarily helpful in helping contain the risk, help slow, reduce the risk of a more catastrophic outcome.

ZAKARIA: That sounds like a vote for the reappointment of Ben Bernanke?

GEITHNER: Well again I said that the chairman has done an exceptional job and I think he deserves a lot of confidence.

On the strength of the Dollar:

FAREED ZAKARIA, HOST, FAREED ZAKARIA GPS: Mr. Secretary, you are off on a trip, and you are going to Europe and other places. I have a quote here from Mr. Trichet, the Europe Central Banker, and it says: “I have one message: It is extremely important that the United States say that a strong dollar is in the interest of the United States.

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: It is my pleasure to say it: A strong dollar is in the interest of the United States. Of course I deeply believe that, and our commitment is to the world, and of course to the American People is to make sure we are putting in place the policies that can sustain confidence in this economy in this financial system.

ZAKARIA: You don’t worry that the dollar is going to weaken as a reserve currency of the world as the Chinese talk about wondering if there is some alternatives, as the Russians talk about it? The Arabs seem to be pointing in that direction.

GEITHNER: You know I actually don’t worry about that, Fareed, because if you look at the response of the world as we go through this period of time, when people are most concerned about risk, generally they want to be investing in the most liquid and safest market in the world which is still the market for our Treasury bills. And I think you have seen that pattern consistently over the period of time, and we want to make sure we can maintain that basic response.

On the new consumption:

FAREED ZAKARIA, HOST, FAREED ZAKARIA GPS: You talked about the global imbalances that caused this problem, or at least a part of the backdrop of it. Part of the solution must be that we spend less, that we consume less, as you said, but partly, surely it is also that the Chinese, principally, save less. That is to say that the policies of the government that actually make it difficult for Chinese consumers to consume more are also changed. Have you made any head-way in getting the Chinese to stimulate private domestic consumption, not the government spending money, but the private Chinese consumer?

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: I think if you listen carefully to what the Chinese say, they believe even in that imperative. In, I think about two weeks, Secretary Clinton and I are going to host the first meeting of the strategic and economic dialogue with the leadership of China, and a core part of that discussion is for us to put in place a common framework that as we raise our savings in the United States, which is necessary and is already happening at a significant scale, that the world as a whole adjusts to that new reality.

On economic forecasts for 2010:

FAREED ZAKARIA, HOST, FAREED ZAKARIA GPS: Your growth forecast for 2010 is 3.2%, economic growth for the United States. The IMF came out with its forecast which is 0.8%. If they’re right -

TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: I actually haven’t looked at the IMF forecast.

ZAKARIA: Economists, I think, it would be fair to say a lot of economists think it’s likely to be lower than 3.2%. If that happens, my question to you is, the deficit as a percentage of GDP becomes much higher. Are you willing to do whatever it takes to keep the deficit as a percentage of GDP within the range that the president has suggested?

GEITHNER: He understands deeply, the importance of making sure that we put in place a stronger foundation for recovery as a whole, and part of that will be a return to living within our means as a country.

ZAKARIA: And that might mean higher taxes?

GEITHNER: Well it will –

ZAKARIA: There’s no magic, there’s only two ways to close the deficit.

GEITHNER: As a country, and there is no mystery in this, we’re going to have to bring our resources and our commitments closer into balance. It is a necessary thing for us to do.

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Reader Comments (1)

I love how Geithner hails the banks' ability to raise capital, as if that really implies confidence in the banks themselves. Not so fast, Turbo. What that implies is that market players are gaming Geithner like a punk -- they KNOW that Treasury will continue to bail out the banks, come hell, highwater or Doomsday.

The non-stress tests didn't show jack about the banks, but they showed the govt.'s hand. Geithner made it clear that any bank that failed the stress test would have the full backing off the US Taxpayer (that's us) if they couldn't raise capital elsewhere. That's what market players are betting on (that and the confidence that sucker retail investors will chase their gains).
Jul 15, 2009 at 10:11 AM | Unregistered CommenterJames H

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