Geithner On The Banks And China

Interesting stuff from Geithner tonight. From Reuters, here is what he had to say about the banks:

U.S. Treasury Secretary Timothy Geithner does not see a second wave of banking collapses and the government is ready to support capital-raising when needed, a Japanese newspaper said on Sunday.

In an interview with the Asahi Shimbun newspaper, Geithner was quoted as saying U.S. authorities were making sure there was steady funding and that banks were able to meet commitments.

“So in some ways what we’re saying is we’re going to backstop the amount of capital-raising that’s necessary,” he was quoted as saying in an English text of the interview.

Translation, the U.S. banks are now fully wards of the state. No failures, no nationalizations, your bonds are safe. That’s the way I read it but perhaps I’m being too critical.

He’s also kissing up to China.

He told the Asahi that China had played a role in stabilizing the global financial crisis, and added that Beijing was committed to a more flexible currency regime over time.

“China’s exchange rate appreciated quite substantially in real terms,” he was quoted as saying.

“China’s accumulation of foreign reserves has slowed and they are putting in place economic policies that will encourage domestic demand and growth.”

This is, of course, nonsense. China’s accumulation of reserves has slowed because the world’s economy has slowed and it’s biggest customer, America, is flat on its back. They are spending massive amounts of money on a relative basis to keep their economy afloat and ward off domestic unrest. Whether they have in fact adopted policies to spur domestic demand is a very open question.

We need more from this administration than his Treasury Department and economic advisors are delivering.

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