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**goadam1** · March 25, 2009, 01:03 PM

Re: Oooops!

the herd is skittish. Did someone yell, "stampede!"

**bill** · March 25, 2009, 01:10 PM

Re: Oooops!

http://www.cfr.org/publication/18925/

QUESTIONER: Hi. Good morning. Good morning, Mr. Secretary. Doug Smith, Standard Chartered Bank. Wonder if I could change the subject for a second.
GEITHNER: Former Treasury official. Distinguished Treasury official.
QUESTIONER: Well, thank you. Wonder if you could comment on two related things. One, the Chinese government proposal about a global currency; and about the IMF regulations that were -- the new IMF idea about, you know, very general agreements to borrow and having a faster ability to disburse to the (margin ?) markets.
GEITHNER: On the first question, I haven't read the governor's proposal. He's a remarkably -- a very thoughtful, very careful, distinguished central banker. Generally find him sensible on every issue. But as I understand his proposal, it's a proposal designed to increase the use of the IMF's special drawing rights. And we're actually quite open to that suggestion. But you should think of it as rather evolutionary, building on the current architectures, than -- rather than -- rather than moving us to global monetary union.
On the IMF piece, you know, emerging markets are facing a very sharp pullback in capital flows, which -- like we're seeing here in the United States -- is -- creates greater risk. You're going to have a deeper contraction in activity than would otherwise be necessary just adjusting to the end of the boom. And the IMF and the World Bank exist to -- created to -- exist to -- their principal rationale for existence is to be responsive to trying to attenuate those kind of pressures. But to do that, they need a much more substantial contingent capacity to lend in this (context ?), lend with conditions targeted to where the world needs it.
And what we've proposed is that we put to place -- put in place a very substantial, $500 billion facility as a crisis facility for the -- for the IMF to rely on. And that, alongside with greater resources from the World Bank and the regional development banks, would provide a -- again, a much stronger form of finance to help attenuate the pressures we're seeing outside of the United States. And you know, we want recovery here to be reinforced by recovery around the world. And I think there's going to be broad-based support for substantial progress in this dimension.
ALTMAN: Let me just follow that up for one second. A number -- I haven't read the governor's essay, either, but a slew of news reports interpreted his comments to suggest that the world needs a super reserve currency, and that the dollar, on some gradual basis, ought to be replaced in favor of that. And I wasn't entirely clear what your response was.
GEITHNER: Well, as I said, I haven't read his proposal, but I thought the initial reaction was sort of ahead of the details of the proposal I saw. The only thing concrete I saw was a reference to expanding the use of the SDR, but I look forward to reading his figures. As I said, I have tremendous respect for him. He's a really thoughtful, pragmatic guy, and he has a great record of credibility in China as a whole, so anything he's -- he's thinking about deserves some consideration.
It is very important just to underscore that the future evolution of the dollar's role in the system depends really primarily on how effective we are in the United States in getting not just recovery back on track, our financial system repaired, but we get our fiscal position back to the point where people will judge it as sustainable over time.
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ALTMAN: I'd like to ask one final question, in effect, on behalf of the market. It might be useful if you tried to clarify your earlier comment on the reaction to the central bank governor of China's idea, and so let me ask the question this way. Do you see any change over the foreseeable future in the basic role of the dollar as the world's key reserve currency, or the reserve currency?
GEITHNER: I do not. I think the dollar remains the world's dominant reserve currency. I think that's likely to continue for a long period of time. And as a country, we will do what's necessary to make sure we're sustaining confidence in our financial markets, and in the productive capacity of this economy and in our long-term fundamentals.

**FRED** · March 25, 2009, 01:16 PM

Re: Oooops!

Originally posted by GRG55 View Post

An interesting day so far. :p

First this:

Geithner says "quite open" to China's SDR proposal

Wed Mar 25, 2009 10:44am EDT
NEW YORK (Reuters) - Treasury Secretary Timothy Geithner on Wednesday said he is "quite open" to China's suggestion of moving toward a currency system linked to the International Monetary Fund's Strategic Drawing Rights...

...Geithner, responding to a question, said he hadn't read Zhou's proposal but added, "as I understand it, it's a proposal designed to increase the use of the IMF's Special Drawing Rights. I am actually quite open to that suggestion."...

Followed by this:

Oil nears $54 on Geithner comments

Wed Mar 25, 2009 12:09pm EDT

LONDON (Reuters) - Oil retraced early losses on Wednesday, rising to around $54 a barrel after the U.S. Treasury Secretary said he was "quite open" to recent Chinese suggestions on moving to a new global reserve currency...

Then this:

Gold spikes after Geithner speaks on dollar

Wed Mar 25, 2009 12:40pm EDT

LONDON (Reuters) - Gold prices spiked up on Wednesday as the dollar fell after U.S. Treasury Secretary Timothy Geithner talked about a system put forward by China that would replace the dollar as the world's reserve currency...

and finally this:

Geithner says dollar to be reserve currency for long time

Wed Mar 25, 2009 1:17pm EDT

NEW YORK (Reuters) - Treasury Secretary Timothy Geithner said on Wednesday the U.S. dollar is still the world's reserve currency and will remain so for a long time...

Well I'm glad we got that little misunderstanding straightened out...:rolleyes:

Suddenly John Snow looks like a bloody genius...

Good job putting that in sequence for us. Artificial demand for dollars supports an inflated oil price that discounts oil for all major nations that import oil--that is, all of them. A competing currency is bad for the Dollar Cartel. Surely Geithner knows this.

**goadam1** · March 25, 2009, 01:20 PM

Re: Oooops!

It looks like a reasonable answer to a reasonable question.

**GRG55** · March 25, 2009, 01:36 PM

Re: Oooops!

Originally posted by goadam1 View Post

It looks like a reasonable answer to a reasonable question.

Five minutes in the corner with a copy of the Treasury Department mission statement memorization kit for you...and no cookies with your milk this afternoon either!

The proper answer is everywhere and always:

“We support a strong dollar. We think the value of currencies are best set in open currency markets,”

That's why it's important that the Treasury Secretary be a bright person.

But not too bright...:rolleyes:

This sort of thing would never have happened if John Snow was still there.

**goadam1** · March 25, 2009, 01:56 PM

Re: Oooops!

You could have Phil Gramm and all this would be a mental recession. But hanging on every phrase and slip of the tongue will drive us all mental.

**GRG55** · March 25, 2009, 02:07 PM

Re: Oooops!

Originally posted by goadam1 View Post

You could have Phil Gramm and all this would be a mental recession. But hanging on every phrase and slip of the tongue will drive us all mental.

...I think about Paris when I'm high on red wine
I wish I could jump on a plane
So many nights I just dream of the ocean
God I wish I was sailin' again...

...These changes in latitudes, changes in attitudes
Nothing remains quite the same
Through all of the islands and all of the highlands
If we couldn't laugh we would all go insane...
...If we weren't all crazy we would go insane

--Jimmy Buffett; Changes in Latitudes, Changes in Attitudes, 1977

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