Outgoing Treasury Secretary Tim Geithner had a few final observations for us in an interview he conducted Friday with the associated press.
He is in agreement with many private forecasters that growth of the economy will accelerate this year, and that the economy is much stronger than people appreciate.
Part of his reason for optimism is because situations that held us back over the past few years, Oil shocks and the European debt crises seem to have subsided.
Here are a few other points that encourage him:
- The move by the House of Representatives to postpone the debt ceiling deadline fro four months is helpful, and it is imperative that both sides now find an agreement.
- We must seek a permanent solution for Fannie Mae and Freddie Mac, which the government took over in 2008. This may take three to five years.
- While there is much discussion about Dodd Frank and its complexity, he doesn’t see any of its basic core reforms being undone because they make a lot of economic sense for the country.
- He strongly defends his actions to help bail out the large banks with over two trillion dollars, to help stabilize the US (and world) financial system. He knows many will remain unconvinced, but he is certain the collapse could have been much deeper without these actions.
- He believes the world views the American political system as better positioned to deal with our challenges than any other major economy, and that’s one reason why we can borrow at very low rates.
The best economic strategy for the country would be to combine a set of very powerful near-term investments in infrastructure and elsewhere that would help support demand with long-term fiscal reforms that would restore sustainability.
The limits we face right now are only political, not economic, and not fiscal.
He has no plans to return to Washington as Chairman of the Federal Reserve when Ben Bernanke’s term ends next year.
We shall see about that.