Tim Geithner interview

In his own words under Geithner the best we can hope for is a long, slow recovery with high unemployment well into the future

One key question is whether the Banks are really solvent. This will eventually emerge but I don't have any faith in the stress tests, they have the appearance of being carefully orchestrated. It would be worth while to research further the contradiction between the IMF and Fed figures that Judy Woodruff referred to and which Geithner argued against.

Tim Geithner interviewed by Judy Woodruff
http://www.pbs.org/newshour/?cc=1234
streaming video (or download the audio)

He starts off apologetic about half a million new unemployed last month, that long term unemployment is growing, 5.7 million americans have lost jobs since the recession began including 2.7 million in the past four months

Even as growth recovers unemployment will keep rising for a while

Evades question about GM sending jobs overseas

Q. ... the recovery may take several years?
A recession that occurs because people have borrowed too much requires a slow, long recovery ... takes a long time for people to reduce debt and save more

Acknowledges that many people who planned to retire won't be able to because their benefits have been devalued

The Banks stress tests were a very exacting and tough set of standards (repeated several times during the interview)

Stress tests bring an unprecedented level of transparency to bank balance sheets, which helps create confidence in the future

Q. IMF worst case scenarios are worse than the US governments worst case scenarios?

Geithner responds to that, says eventually that the Fed numbers are close to IMF estimates

We did the stress tests so that people would have more confidence in the system!! (I interpret this an unintentional candor, that the result of the stress tests were carefully orchestrated including negotiations with banks for two weeks before they were released)

Q. Why not nationalise the Banks or let some of them fail?
The banks are solvent, there is not a tenable case for nationalisation. Nationalisation would end up more expensive and riskier (his tone of voice becomes more assertive and less apologetic here, conveys the feeling that nationalisation is a ridiculous option)

He rejects criticism that he is too close to Wall Street, he would never do anything that would benefit some piece of the financial system and harm the people, seems hurt that anyone might suggest that


ps. I am involved in a long discussion about the economic situation on this comment thread at the Strange Times site.