The Great Debate UK
Geithner’s fudge won’t kill the euro zone debt Ouroboros
U.S. Secretary of the Treasury Timothy Geithner (R) leaves after talks with Polish Finance Minister Jacek Rostowski in Wroclaw, September 16, 2011. Geithner urged euro zone ministers to leverage their 440 billion euro bailout fund and free more resources to tackle the debt crisis. REUTERS/Mieczyslaw Michalak/Agencja Gazeta
The frosty reception given to US Treasury Secretary Timothy Geithner at the ECOFIN meeting in Poland last week tells you all you need to know about what is wrong with the EU. The hostility was directed not at the feebleness of the advice he had to give, but at the right of an American passport-holder to offer any advice at all to the policymaking elite of Europe, who are so obviously capable of handling the crisis themselves without any outside assistance.
As far as I can tell, Geithner’s proposal amounts to leveraging the EFSF so that it can be inflated to a level sufficient to assure the markets that it has the resources to do the enormous job it has been given: bailing out Greece, Ireland, Portugal, Spain, probably Italy and maybe even France at some point.
So, as ever, the American solution to the problem of excess leverage is… even more leverage. Financial wizardry is what Europe needs now – after all, it worked so well last time around… Risks? What risks? The additional borrowing will be guaranteed by the ECB, whose credit is cast-iron, so problem solved. Why did it take them so long to come up with an answer? If only it were so easy. Ask yourself: why is the ECB so creditworthy in the first place?
from The Great Debate:
China’s U.S. debt overhang needs Chinese cure
-- Wei Gu is a Reuters columnist. The opinions expressed are her own. --
When U.S. Treasury Secretary Timothy Geithner told students at Peking University that China's holdings of U.S. Treasury bonds were safe, his answer drew loud laughter from the audience.
Even economist and columnist Paul Krugman, who is often critical of U.S. economic policy, found himself defending America when he was repeatedly asked the same questions in China recently: Will you (U.S.) underwrite the value of China's holdings of U.S. government debt? Will you be prepared to pay a much higher rate of interest against the risk of high inflation and dollar depreciation?
from The Great Debate:
Is the executive pay bubble popping?
-- James Saft is a Reuters columnist. The opinions expressed are his own --
Signs are it won't just be the salaries of bankers coming under fire.
An unusual array of forces are combining to make it very likely that top tier pay may be structurally falling, rather than simply taking a cyclical dip during a downturn.
Take it for granted that pay in the financial sector will fall. A combination of increased government ownership and a shrinking businesses taking fewer risks with other people's money will see to that.
from The Great Debate:
First 100 Days: Obama and trade
-- Sean West is a Comparative Analytics analyst at the political risk consulting firm Eurasia Group. The views expressed are his own. --
Fear that President Barack Obama will backslide on America’s free trade commitments is misplaced—in fact, he may eventually expand America’s commitment to liberalization. His pledge to revisit the North American Free Trade Agreement (NAFTA) amidst an economic slump was one of his most widely discussed policy positions of the campaign season.
