Geithner's 'Deeply' Held Belief in the Dollar

Mr Geithner, speaking to reporters in Japan yesterday made several statements in which he espoused his belief in a strong dollar policy:

“I believe deeply that it’s very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar” Mr Geithner said “We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors and .. savers but investors around the world”

However, at the G-20 Meeting of Finance Ministers and Central Bank Governors on November 7, just four days ago he said the following:

This is why the recovery programs put in place in the United States and around the world were designed to provide support for growth over a two year period, and this is why governments around the world are committed to continue to reinforce the recovery now underway, before we shift to restraint.

The policies engaged in by the Department of the Treasury under Mr. Geithner have been decidedly negative for the dollar which is near 18 month lows, and has come under fire by countries all over the world. Support for removing the dollar as the worlds reserve currency is on the rise with many sovereigns openly stating this position. Continuing the policies in place may or may not contribute to a long term world wide recovery but it is certain that continuing the policies that have forced the dollar down to these levels will not cause it to strengthen.

I am concerned that Mr. Geithner says one thing while doing another. His lack of taking any responsibility for the crisis during his spoken testimony before Congress earlier this year was disconcerting. After all, as president of the New York Federal Reserve he was a major player in the events that led up to it, and if he didn’t contribute to the crisis by action, he then must have by his inaction. His shaky performance before Congress was not that of a resolute decision maker but of a milquetoast. Now his stating a “deeply” held belief in a strong dollar policy while engaging in essentially a diametrically opposed set of actions is even more disconcerting. A pusillanimous back bench pipsqueak is questionable as the Secretary of the Treasury but an individual who’s veracity is in question is intolerable in the extreme.

Mr. Geithner should immediately lay out his “strong dollar policy” or explain how the policy in effect can in any way be interpreted as such. It is my “deeply” held belief that the only way to do this would be to employ Orwellian doublespeak the likes of which we haven’t seen in quite some time.

I supported Mr. Geithner’s appointment at the time he was chosen. I have come to believe that that support was unwarranted and the choice erroneous. His words appear to be divergent from his actions and from history as we have come to know it. The last thing this country needs is to have the people making decisions of monumental importance be of questionable character. I hope in the upcoming days Mr. Geithner rises to the job at which he swore to do his best, and that we have not in fact seen his best because that is clearly insufficient.

Disclosure: The Author holds short positions in US Dollar futures, and is short the Long Bond (30 yr Treasury) via Futures and long TBT

Comments

[TraderRob:]

Talk is cheap Timmy. By printing and selling bonds the U.S. government has taken the stance that the dollar is unimportant and that the primary objective is growth. A strong dollar strong growth, by way of stimulus, policy is an oxymoron and should be rebuked by traders, investors and U.S. constituents.

Grow up Timmy and give us something to go on here. Simply WISHING for a stronger dollar, or similarly saying we support "strong dollar policies", is completely useless.

There will be cries from the left (Obama/Dodd/Frank/Pell... for more stimulus and when this happens Tiny Tim will have his chance to truly support or revoke "strong dollar" policy in the face of a fading recovery or cheaper greenbacks.

Nov 12 08:29 AM

[User 353732:]

It is about as deeply held as his belief in paying personal taxes.......

When actions are so contrary to assertions there can be only 3 explanations: hypocrisy, deception or schizophrenia.

The only deeply held beliefs members of the US Regime have are the gluttonous pursuit of insatiable appetites for power, wealth and fame.

Nov 12 09:19 AM

[kcr357:]

I applaud your article, however, America needs to pull their collective heads out of their asses(apparently a tv is up there showing non stop episodes of "Survivor:Birmingham", or whatever people are watching today). A little bit of news reading should inform the general public of what is going on in their country, articles like your should NOT BE NECESSARY, as the dollar de-leveraging, middle class money swipe for bailouts, etc etc. events are plastered everywhere is newspapers, but very few dwell on the info long enough to process it. We cant move onto solving the problem until we are aware of it.

Nov 12 10:08 AM

[Boxed Merlot:]

...The last thing this country needs is to have the people making decisions of monumental importance be of questionable character. I hope in the upcoming days Mr. Geithner rises to the job at which he swore to do his best, and that we have not in fact seen his best because that is clearly insufficient...


HEAR HEAR!!

Nov 12 10:26 AM

[Dragon Master:]

Wen Timmy opens his a$$ about his belief of strong $, just as if a hooker tries to convince public she is virgin. That is what US left for everyone outside believes.

Nov 12 11:12 AM

[Moon Kil Woong:]

Geithner believes in helping crooked bankers and that's just about all. His deeply held belief in the dollar means nothing. He may have faith in the dollar merely because faith requires an absence of fact. Personally, I prefer facts when it comes to economics. Faith has very little to do with anything outside of God.

Nov 12 11:34 AM

[j-dub:]

He and Goldman Sachs did send Obama to Asia to calm fears over the dollar collapse.

So we've got that going for us..............

Nov 12 11:20 PM

[yellowhoard:]

When Obama talks to Goldman, does he need an appointment?

Nov 13 06:46 AM

[Mr. G:]

The above comments reinforces my belief that americans expect instant gratification to our current financial crises. Most of the statements fail to appreciate the magnitude of what has ocurred.

I think Geitners statments are well meaning, but the "devil is in the details". I wish someone could espouse an economic policy superior to current FED action to overcome and address all the problems we currently face. GI

Nov 13 11:00 AM

[auto44:]

Timmy is no dope. He knows he is selling BS. Fiat currencies will strike some kind of moving balance with each other, it is their balance or relationship with things that are real like commodities, real estate, Warren Buffet's locomotives,track, and rail cars, plants and equipment, labor and etc. that indicate the value of any fiat currency. The assets that a country's citizens or gov''t own and their ability to trade them at an advantage will ultimately lead to a proper balance. Given this, HOW DO WE STAND?

Nov 13 12:11 PM

[Tony Daltorio:]

The entire highlight of that recent G20 finance ministers was the hissy-fit little Timmy threw when many other nations brought up the concept of transactions tax on the big boyz like Goldman.

Yeah, gawd-forbid we do anything to lower Goldman's bonus pool, right Timmy?

Nov 13 03:49 PM

[j-dub:]

Speaking from very informed sources, it is in fact the case that The Lloyd will need no less than 48 hours (seems reasonable) notice before meeting with Barry.


On Nov 13 06:46 AM yellowhoard wrote:

> When Obama talks to Goldman, does he need an appointment?

Nov 13 09:28 PM