Geithner sees confidence return, supports dollar


Jul 14, 2009 


(Reuters) - U.S. Treasury Secretary Timothy Geithner said on Tuesday he saw 
signs of confidence returning to the U.S. financial sector and pledged that the 
United States would pursue policies that preserve the dollar's value.

"The policies of the United States are designed to lay the conditions for a 
strong dollar for more stability in the international monetary system and among 
the major economies," he said at the Jeddah Chamber of Commerce.

Geithner, who arrived in Saudi Arabia overnight from London, is aiming to 
reassure Gulf Arab states that the United States wants their investments and 
that their U.S. dollar assets are safe. He travels to Abu Dhabi in the United 
Arab Emirates on Wednesday and will also make a stop in Paris on Thursday.

Signs of strength were also returning to the economy, he said. "We are seeing 
very active issuance in corporate bonds and equity markets and the banking 
system itself in the United States shows signs of more confidence," Geithner 
said.

Geithner said aggressive efforts to counter a global financial crisis were 
starting to work and acknowledged the United States had a special duty to help 
spur a recovery.

"Given the dollar's role in the international financial system and the 
significant impact of the U.S. economy on global economic conditions, we fully 
recognize that the United States has a special responsibility to play," he said.

Five of the six Arab states that comprise the Gulf Cooperation Council -- Saudi 
Arabia, the UAE, Bahrain, Qatar and Oman -- peg their currencies to the dollar. 
The sixth, Kuwait, uses a basket heavily weighted in dollars.

As he did in London, Geithner said the global economy faced severe challenges 
but sounded a reassuring note about future prospects if "steady, forceful and 
sustained" support continues until private investment and spending lead a 
recovery.

"The force of the global recession is receding," Geithner said.

Stabilize, REPAIR

He said it was vital to stabilize and repair a damaged U.S. financial system 
and outlined efforts to do so. "No recovery is possible without repairing the 
institutions and markets that are critical to the supply of credit," Geithner 
said.

He said a $787 billion U.S. economic stimulus program, designed to boost demand 
over a two-year period, will have its largest impact on the spending side over 
the next six months.

Geithner made no mention of calls from some U.S. lawmakers to consider another 
stimulus package, instead emphasizing the need for patience with the current 
one.

In the United States, he said there was some pickup in business and consumer 
confidence and that the cost and availability of needed credit was improving.

"These improvements have been more substantial and have come more quickly than 
many of us expected when we were designing these programs in December and 
January," he said.

He praised Saudi Arabia for having put in place one of the largest stimulus 
packages of any G20 country and noted that the G20 itself -- which groups 
industrial nations and key emerging economies -- will take on a growing role in 
shaping the architecture of the global financial system.

Geithner cautioned that it would take "considerably more time" to get the 
global economy back onto a path of sustained growth. He noted the IMF recently 
upgraded its global forecast, predicting 2.5 percent growth for 2010.

That is "slower than typical for recoveries, but recovery nonetheless," 
Geithner said.

When recovery is established, he said the United States would quickly unwind 
the exceptional measures it has put in place and get its budget deficits under 
control.

"We are very committed to make sure that as we get through this crisis to bring 
down our fiscal deficits and to reverse these extraordinary interventions that 
we have taken," he said.

Soaring U.S. deficits, which require mounting borrowing to pay for government's 
day-to-day operations, are fostering concern about the dollar's value.

The U.S. Treasury chief was scheduled to fly from Jeddah to Yanbu on Thursday 
afternoon to meet Saudi King Abdullah and his advisers including Finance 
Minister Ibrahim al-Assaf, then depart in the evening for Abu Dhabi.





      

Kirim email ke