Geithner in U.K., Germany to target Europe debt crisis
U.S. Treasury Secretary Timothy Geithner’s trip to Europe will look deeper into plans to control deficits and will strengthen his emphasis on global financial reform; Geithner will focus on a coordinated effort between Europe and the U.S.
The potential reaches of a Eurozone crisis
Microsoft chief executive Steve Ballmer voiced concern that a European debt crisis would spread beyond the continent and hurt U.S. economic recovery. But the Organization for Economic Cooperation and Development says the European debt crisis is unlikely to trigger a double-dip recession because of the trade boost in the Eurozone due to a falling euro. Goldman Sachs also says the Eurozone economic fears have been overdone, as only the smallest member states have been affected.
What Geithner can do
If lessons from the U.S. credit crisis are an indicator, Geithner’s potential to help Europe lay partially within his ability to determine which banks have potentially toxic Greek debt, says Jacob Kierkegaard of the Washington’s Peterson Institute for International Economics. “The thing that he should definitely push the Europeans to do is the same kind of bank stress testing that we saw in the U.S. banking system early last year.”
But Carl Weinberg at High Frequency Economics worries whether the Europeans will be receptive. “It’s not clear that the Europeans are prepared to listen to the American point of view.”
Geithner begins his trip in London with U.K. Chancellor of the Exchequer George Osborne and Bank of England Governor Mervyn King, followed by a Frankfurt meeting with European Central Bank President Jean-Claude Trichet and a Berlin meeting with German Finance Minister Wolfgang Schaeuble.
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