Geithner to G-20: Stay the Course

By Ron Scherer; Ben Quinn | The Christian Science Monitor, March 26, 2009 | Go to article overview

Geithner to G-20: Stay the Course


Ron Scherer; Ben Quinn, The Christian Science Monitor


Global economic trends are the bleakest they have been in 50 years. Trade is falling, international banking giants need to be bailed out, and joblessness is rising around the world.

But in the face of this juggernaut of bad tidings, top US officials are counseling world leaders not to panic - to just stick with what they are doing.

"There is a very substantial amount of fiscal and monetary action in place" across the globe, said US Treasury Secretary Timothy Geithner on Wednesday. "That will start to get traction."

Despite some disagreements, he says, world leaders, on the eve of the Group of 20 economic summit in London, "are fundamentally with us."

US won't be conservative

In past downturns, Mr. Geithner argued in a speech in New York at the Council on Foreign Relations, governments have been too conservative and reacted too slowly. "They put the brakes on too soon," he said. "We won't do that."

A first goal for Geithner and Federal Reserve Chairman Ben Bernanke is to try to stabilize the world financial system. On Thursday, Geithner is set to lay out the Obama administration's framework for dealing with the type of systemic risk posed by nonbanking companies such as AIG, the failed insurance company into which the US government has poured $170 billion. The Obama plan will broaden oversight to include institutions such as insurance companies or hedge funds whose demise could cause a negative cascade effect in the broader economy.

The problem is not just a US problem. Geithner noted that if nations do not act together on oversight, companies will merely move offshore to avoid regulation. Thus, he sees in the current economic crisis a window of opportunity "to begin the process of getting a consensus" on how to fix the overall system.

About $5 trillion in loans are either delinquent or will be at some point, estimates economist Mark Zandi of Moody's Economy.com. Half of those are in the US and half are in the rest of the world. "Not all of those loans will default and be a loss," he says, estimating actual losses may total $2.4 trillion to $2.5 trillion.

Trade down 9 percent

The bad loans come against a backdrop of dismal global economic projections: The World Trade Organization (WTO) said this week that world trade will shrink by 9 percent, the largest percentage decline since World War II.

"The contraction in developed countries will be particularly severe, with exports falling by 10 percent this year," the WTO said in its annual report, issued Monday. "In developing countries, which are far more dependent on trade for growth, exports will shrink by some 2 percent to 3 percent in 2009."

As global trade dwindles, global protectionism is on the rise, despite nations' pledges not to raise trade barriers. Even some members of Congress tried to insert "Buy in the USA" provisions into the economic stimulus package that was signed into law on Feb. 17.

"Examples of it are everywhere, but so far it's been contained," says Mr. Zandi.

First postwar global downturn

For the first time in 50 years, the International Monetary Fund is predicting that the world economy will shrink. The IMF's revised forecasts will say the global economy will contract by 0.5 to 1 percent in 2009, IMF managing director Dominique Strauss-Kahn said Monday. The decline will be sharpest in developed countries, including the US and Europe, which will shrink by 3 percent.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Geithner to G-20: Stay the Course
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.