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Geithner's European Lecture Tour

Jul. 31, 2012 2:53 AM ETFXE1 Comment
Craig Pirrong profile picture
Craig Pirrong

Timmy! is in Europe, to lecture the Europeans (yet again) on the need to get their house in order. After all, his trips have been so wildly successful before, in the same way as Rodney Dangerfield shows were wildly successful. Or in the same way as Geithner's "very tough" action on Libor took care of that problem.

His trip has a special urgency now, because Obama fears that economic "headwinds" from Europe will interfere with his reelection prospects.

Germany's finance minister, Wolfgang Schäuble, has been known to give Timmy! verbal lashings in the past, and he did deliver a preemptive rejection of what Geithner is pushing Europe-and Germany specifically-to do:

Wolfgang Schäuble, Germany's finance minister, has dismissed speculation about any Spanish request for eurozone support in buying its sovereign bonds, and ruled out making more concessions to help Greece, on the eve of talks on the eurozone crisis with Tim Geithner, US Treasury secretary.

The tough German resistance to launching any new initiative in the two most embattled member states of the eurozone looks set to clash with Washington's constant appeal for action to stem contagion in the crisis.

Schäuble was on good behavior in the aftermath of his meeting with Geithner, and avoided the stinging rebukes he had delivered in the past. Instead, the two limited themselves to exchanging banalities so light that it must have taken a large number of sandbags to keep them from soaring off into the heavens, like the Wizard of Oz. They agreed that it would be a good thing to avoid a eurozone crisis, and that everything should be done to achieve that:

The statement said that Messrs. Geithner and Schäuble "emphasized the need for ongoing international cooperation and coordination to achieve sustainable public finances, reduce global macroeconomic imbalances, and restore growth."

This article was written by

Craig Pirrong profile picture
Dr Pirrong is Professor of Finance, and Energy Markets Director for the Global Energy Management Institute at the Bauer College of Business of the University of Houston. He was previously Watson Family Professor of Commodity and Financial Risk Management at Oklahoma State University, and a faculty member at the University of Michigan, the University of Chicago, and Washington University. Professor Pirrong's research focuses on the organization of financial exchanges, derivatives clearing, competition between exchanges, commodity markets, derivatives market manipulation, the relation between market fundamentals and commodity price dynamics, and the implications of this relation for the pricing of commodity derivatives. He has published 30 articles in professional publications, is the author of three books, and has consulted widely, primarily on commodity and market manipulation-related issues. He holds a Ph.D. in business economics from the University of Chicago.

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