Tags: Geithner | Public | Finances | Fine | Banks | Prep | Worst

Geithner: Public Finances are Fine, but Banks Prep for Worst

Monday, 18 Apr 2011 12:39 PM

Treasury Secretary Timothy Geithner says the U.S. debt situation is manageable and isn't concerned about Tea Party threats to force the government to default via not raising the debt ceiling.

Banks appear to believe him, but they are preparing for worse.

"You see a lot of confidence in markets that the American political system will be able to get on a path [to resolving the fiscal problems]," Geithner tells The Financial Times.

"The markets believe that our problems are manageable and our system will solve them. There is no conceivable way that Congress would take the risk [of forcing a default]."

There is little evidence that investors in U.S. debt — foreigners especially —are massively ditching their holdings and running elsewhere.

That doesn't mean bankers aren't taking Tea Party threats idly.

"There are all kinds of 'what if' scenarios being discussed," one unidentified banker tells the newspaper.

The Obama administration recognizes the need to cut spending to narrow deficits by announcing $4 trillion in spending cuts.

However, lawmakers don’t agree on that figure, with Republicans saying the president isn't going far enough.

Financial institutions are taking note with Pimco, the world's largest bond fund, saying it's shorting Treasurys.

Both Republicans and Democrats agreed recently on $38 billion in spending cuts in order to avoid a government shutdown.

The figure is lower than what some Republicans wanted, but most are satisfied with the message it sends.

"Is it perfect?"says House Speaker John Boehner, according to the New York Times.

"No. I’d be the first to admit it’s flawed. But welcome to divided government."

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Treasury Secretary Timothy Geithner says the U.S. debt situation is manageable and isn't concerned about Tea Party threats to force the government to default via not raising the debt ceiling. Banks appear to believe him, but they are preparing for worse. You see a lot of...
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2011-39-18
Monday, 18 Apr 2011 12:39 PM
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