Geithner Thinks Recession is Weaker

Michael Bowler | RSS | Mon, Jun 01 2009 | 3 Comments

The Secretary of the United States Treasury, Timothy Geithner, said this weekend that the global recession seemed to be ‘losing force’ but that to come out of it strong the United States and China would need to institute major economic reforms to create a stronger foundation. According to Geithner, a successful transition to a stronger global economy will “require substantial changes to economic policy and financial regulation around the world.”

Geithner, who has barely been heard from in a more notable sense since nomination, has been in China the last few days to create closer economic ties with China after realizing that they are a major key to economic success. He told reporters that he was hoping to gain the same economic relations with China that we enjoy with several European countries.

In the speech he gave there, he praised the economic transition China has achieved while avoiding past trade disputes the United States has had with them, hoping to foster a closer relationship. It seems that he was hoping to help them bring the yuan,, the currency in China, to a higher economic status. American manufacturers see the yuan at its current economic status as a major reason why trade between the two countries is lower than proposed.

“The global recession seems to be losing force…. The financial system is starting to heal,” said Geithner. He went on to say, “These are important signs of stability and assurance that we will succeed in averting financial collapse and global deflation, but they represent only the first steps in laying the foundation. The process of repair and adjustment is going to take time.”

Timothy Geithner also said that the necessary reforms will include getting the United States budget deficit under control once the recovery is firmly in place, something the Obama administration has been talking about since the election. He said that China will need to create strength in things like pension and health care in order to increase spending confidence there. For a long time, that has been considered critical if China is going to increase domestic production. (Apparently that means the millions of products America buys from China every year is not enough.)

“Our common challenge is to recognize that a more balanced and sustainable global recovery will require changes in the composition of growth in our two economies,” Geithner said. With 1.3 billion people, China ranks as the third largest economy after the United States and Japan, sealing the need for a more unified recovery process. Geithner said that China’s status in the global economy should be recognized better in institutions such as the International Monetary Fund.

In addition to meeting with some of his former professors today, Timothy Geithner was scheduled to visit an economist training program set up by his father who was once in charge of Ford Foundation programs in Asia.

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Tags: united states treasury, economic reform, timothy geithner