The Straits Times
     


Feb 15, 2009
Geithner urges strong medicine

ROME - TIMOTHY Geithner made his Group of Seven debut as US Treasury Secretary on Saturday with a simple, straightforward message - the United States is taking strong medicine to fix its economy and others should do the same.

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On the day after Congress approved a US$787 billion (S$1.19 trillion) economic stimulus package, he had lots to talk about, urging governments and central banks to maintain bold measures until recovery takes hold.

His main mission was to explain to G7 colleagues that the United States was moving swiftly with its unprecedented spending package and a soon-to-be-detailed bank stabilisation plan. He said G7 countries all realized the gravity of the situation.

'Given the severity of the current economic and financial crisis, these actions must be forceful and sustained for a period that matches the likely duration of the crisis,' Mr Geithner said in his closing remarks.

'There is little debate about the scale of the challenges people face, and we see it in Germany just in the last couple days,' he told a a news conference, referring to GDP data released on Friday.

President Barack Obama's plan to rescue the US banking sector fell flat when the initial outline was announced last week, driving stock markets lower and raising concerns about whether the new administration was up to the challenge.

The Treasury Secretary gave little of the further details economists say are needed to convince investors on the plan.

But off the record, a senior treasury official said it had been aware that the plan had been vulnerable to a negative market reaction but decided to proceed in aid of getting the plan off the ground and into consultation at home and abroad.

'That left us necessarily in a position where people would be hungry for details,' the official told reporters, speaking on condition of anonymity.

'We wanted to help get Congress invested in the basic objectives and strategy and also, frankly to be fair, we wanted to come here.' -- THOMSON REUTERS