Geithner, the Bear Stearns Rescue Artist, Urges Global Bank Framework

[Verrocchio]

Talk about chutzpah! Standing in the debris of US bank deregulation, Timmy Geithner calls for a new global regulatory framework for banks with the US Fed at the center.


NY Fed chief urges global bank framework


Banks and investment banks whose health is crucial to the global financial system should operate under a unified regulatory framework with “appropriate requirements for capital and liquidity”, according to Timothy Geithner, president of the Federal Reserve Bank of New York.
_______________

Not surprisingly, Geithner also floated the idea that the Fed may make some of the "new liquidity facilities put in place during the credit crisis" permanent.

[Verrocchio]

Re: Geithner, the Bear Stearns Rescue Artist, Urges Global Bank Framework

Medvedev blames US for financial crisis


Apparently not everyone would support Geithner's recommendation. Russia's Medvedev warned that growing ”economic egoism” had contributed to global problems including rising food prices, but singled out the US for particular criticism for its role in triggering a global economic slowdown.


_____________




Geithner, Medvedev, Trichet, and others are jockeying for influence over something. Perhaps the major world governments and their central banks have concluded that some sort of coordinated solution will be required. These speeches suggest that some private solution-finding and negotiations have taken place.

[Verrocchio]

Re: Geithner, the Bear Stearns Rescue Artist, Urges Global Bank Framework

The Weak-Dollar Threat to World Order



Another sign of the global framework idea was presented on today's Wall Street Journal opinion page. The article cites problems caused for America's trading partners by a weak dollar and calls for international monetary reform. Two proposals are floated as alternatives to the present arrangement: (1) Union between Europe and the US, and (2) a multi-currency monetary union (dollar, euro, and yen). Both would possible include some form of gold standard.

[FRED]

Re: Geithner, the Bear Stearns Rescue Artist, Urges Global Bank Framework

The Weak-Dollar Threat to World Order



Another sign of the global framework idea was presented on today's Wall Street Journal opinion page. The article cites problems caused for America's trading partners by a weak dollar and calls for international monetary reform. Two proposals are floated as alternatives to the present arrangement: (1) Union between Europe and the US, and (2) a multi-currency monetary union (dollar, euro, and yen). Both would possible include some form of gold standard.

As Jamie Gabraith pointed out to us when we interviewed him Nov. 2006 Dr. James K. Galbraith Interview:

...why would any of the three big players follow along, and if they don't, then it doesn't much matter what these smaller countries say. That gets us back to the question of what event will cause a new U.S., European, and Japanese multilateral reserve system to form. Reforming the dollar reserve system into a collective reserve system with the smallest disruption of trade requires, for example, that the European Union (EU) create a euro bond market that is as liquid and transparent as the U.S. bond market. Today, there is no euro bond market at all, only national bonds issued in euros. Creating such a market is no mean feat. Further, the EU will need to run a current account deficit. Given the retrograde and reactionary crew in charge in Europe today, that seems highly unlikely. Transition to a new system usually requires a crisis, but a crisis is not in the interest of any of the players, and the source of the spark of a real fire is not obvious.

What has has changed since then? The weak dollar crisis has intensified and created inflationary problems across Europe and Asia. We see no evidence that the precondition of a euro bond market has been addressed.

Our official position is that transition from a dollar-centric to a multi-lateral monetary system will only come about via severe political crisis because transition costs will not be proportionate politically; the US will bear the brunt of the cost.

[phirang]

Re: Geithner, the Bear Stearns Rescue Artist, Urges Global Bank Framework

Trichet is a good guy: solid engineer from ecole des mines, nancy.