Geithner expressed confidence that the recovery
has taken root in the U.S.,
pointing to clear increases in private investment
and job creation over the last 12 months
The Wall Street Journal
By Geoffrey T. Smith
Inflation on a global level is “not high on the list of concerns,” even though emerging markets across the world are certainly “feeling some pressure,” U.S. Treasury Secretary Timothy Geithner said Friday.
Mr. Geithner told the World Economic Forum in a one-on-one interview that emerging markets could manage their inflation problems better if they loosened their currencies’ links to the dollar, a measure that economists say would lead in most cases to an appreciation against the greenback.
Mr. Geithner also said he’s “very confident that the euro will survive, but argued that Europe needs time to put in place the fiscal and structural reforms that will make that possible.
As for the U.S.’s own fiscal problems, Mr. Geithner admitted that the current position is “unsustainable in the long run” and said the government needs to lay out a credible, multiyear path to sustainability. He bemoaned the fact that the U.S. political system lacks any mechanism to enforce this.
Mr. Geithner expressed confidence that the recovery has taken root in the U.S., pointing to clear increases in private investment and job creation over the last 12 months. Without explicitly endorsing them, he referenced consensus forecasts of between 3.5% and 4% annualized growth for the U.S. for the near term, and a “tighter consensus” that the jobless rate will fall to below 8% by the end of next year, from around 9.6% at present.
He noted, though that the U.S. was consigned to a “tragically moderate” recovery and an accordingly slow decline in joblessness. Mr. Geithner acknowledged the need not to jeopardize the recovery by cutting spending too fast, but warned that there is “no alternative” in the long term to tackling the liabilities that the U.S. faces from its social and health-care spending.
He took comfort from that fact that, although the U.S.’s overall public debt has risen sharply as a result of the crisis and of years of deficits before 2008, the U.S. remains better positioned than many other large economies to deal with the problem, owing to its demographics.
Just dump it on the grandchildren
“We’re a younger country…we have a more open economy,” than many others, Mr. Geithner said.