Gormless Geithner

In June of 2009, US Treasury secretary Timothy Geithner drew loud laughter from amused Chinese students when he made ludicrous claims about American solvency. “Chinese assets are very safe,” he assured students at Peking University, who wanted to know how exposed China was, given that it was the biggest foreign owner of U.S. Treasury bonds.

The Europeans are not as good-natured about Geithner as these Chinese youngsters were. The US treasury secretary told “Europe’s leaders to stop bickering and take control of the debt crisis that has brought ‘catastrophic risk’ to financial markets.” (Via FT)

Pot. Kettle. Black was the retort of Maria Fekter, Austria’s finance minister:

“I found it peculiar that even though the Americans have significantly worse fundamental data than the eurozone, that they tell us what we should do and when we make a suggestion…” (FT)

It is natural for Geitner and the administration, who are undeterred in their “vulgar Keynesianism,” to worry about the healthy “ongoing conflict between governments and the central bank” in Europe. For one thing, Europe is being more fiscally prudent than the US; it is making us look even worse than we are. For another, the EU may be on the verge of decentralizing—or even dissolving. … The “Great Centralizers” in DC would not embrace that development.

Also obvious is the Irish Finance Minister Michael Noonan’s fondness for Geitner’s “leverage plan” for the EU. That’s probably code for liquidity. Ireland is one of the EU’s “PIGS” states. Europe’s profligate states are Portugal, Ireland, Greece, and Spain. (And now Italy.)