US Treasury Secretary Timothy Geithner urged finance ministers of the Group of Seven nations Monday to act "promptly to restore health to the global economy," a statement said. The Treasury said Geithner spoke early Monday to "a collective group of G7 finance ministers via conference call" ahead of the upcoming gathering in Rome opening Friday. "His outreach underscored the imperative of all countries acting promptly to restore health to the global economy and financial sectors," the statement said. "He looks forward to further discussions on this topic with G7 ministers in Rome this weekend." The statement offered no further details of any specific plans or proposals for the G7 meeting. – AFP
Dominant Social Theme: Prompt action can save the day.
Free-Market Analysis: Timothy Geithner, one of at least four Barack Obama nominees that did not pay all his taxes – (and apt to be an even more aggressive leveler to make up for it) – is scheduled to attend a meeting of the G7 industrial countries on Friday. It's all very hush, hush. In the meantime, Geithner is scheduled to reveal at least some of his thinking today (Tuesday), at least from a domestic (American-oriented) point of view.
When it comes to the international message we don't think there is any great mystery. Geithner is a central banker and has participated in many of the bailout dialogues that have taken place in Washington, even prior to his appointment as US Treasury secretary.
Since all of Obama's men (and women too) seem to speak with one voice, it is likely that Geithner will urge the G7 to spend more money on banks' bottom-line, use unworkable Keynesian stimuli via government spending on make-work jobs, levy price controls via salary and bonus ceilings, implement various centralized and rabid forms of financial regulation, and generally print money to "stimulate" the economy. There may be a few wrinkles thrown in as well — a "bad" bank, the purchase of sour assets, etc.
It is interesting to note that the G7 are coming back into play when the plan seems to have been for the more inclusive G20 to offer constructive solutions via the current crisis. But the G20, which was supposed to meet in February, now seems pointed for a meeting in April – and the meeting of the G7 has suddenly emerged as the major stage to present additional Western solutions.
What has probably happened is that the G20 simply proved too unwieldy, and awkward as well. Very obviously, some of the countries had in mind offering critical statements about the West and its economic approach, especially from a central banking point of view. It is obviously OK to lash out at bankers in general, especially investment bankers, but for some reasons the criticism stops at the door of the central bank. It may well be that the G7 has suddenly resurfaced because the G20 (including Russia, China and Brazil) simply couldn't be trusted to stay on message, from the standpoint of the core, Western, monetary elite.
What countries make up the G7? Canada, France, Germany, Italy, Japan, United Kingdom, and United States. This is a fairly controllable conclave. Not much will come out of it that will be unscripted. Central banking will not come under fire. It is doubtful that fingers will be pointed at government profligacy in any meaningful sense.
See, you probably won't read it anywhere else, but we will go out on a limb and venture a guess that whoever arranges these overly scripted affairs obviously walked into a spot of trouble over recent Russian, Chinese and even Brazilian statements that have been highly critical of Western economies and of the United States in particular. So … what now? Well, all that's water under the bridge — history, baby. No more G20 unless everyone gets with the program!
By Friday, the message should be nailed down good and hard. The G7 will bring it on home. The trillion dollar stimulus is on the way in America; the American bank bailout is to be reaffirmed by Geithner today, apparently; and on Friday and over the weekend, the G7 will sing the same harmonious song. Move on. Move on. Move on. La la la.