Geithner: European debt crisis is easing

U.S. Treasury Secretary Timothy Geithner told lawmakers on March 21, 2012, that European nations have made "significant progress" in easing the region's debt crisis. / Susan Walsh

(MoneyWatch) U.S. Treasury Secretary Tim Geithner said on Wednesday that European nations have made "very significant progress" in easing the region's sovereign-debt crisis, while warning that economic growth is likely to remain weak "for some time."

"Over the course of the last eighteen months, the countries in crisis have put in place very tough and far-reaching reforms to address the underlying causes of the crisis," Geithner said in prepared remarks before the House Committee on Oversight and Government Reform.

"Greece has reduced its structural budget deficit, which measures the underlying deficit adjusted for the effects of recession on revenues and expenditures, by nearly 12 percentage points of GDP since 2009, according to the IMF," he added. "Ireland, Portugal, and Spain have reduced their structural deficits by between 4.5 and 5 percentage points over the same period. In Italy, where the structural deficit expanded by much less, the government has shaved off 1.25 percentage points of GDP. Each of these governments has further plans in place to move closer to a sustainable fiscal position over the medium term."

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Writttn testimony by U.S. Treasury Secretary Tim Geithner
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Although these fiscal reforms have helped stem the financial contagion damaging Europe's economies, the bigger challenge is to boost growth and restore competitiveness in the region, Geithner said. To that end, he expressed support for the Italian government's recent move to revamp labor laws, and efforts by Greece, Ireland and Portugal to privatize parts of their economies and slash government pensions. Spain and these countries also are moving to fix their banking systems by recapitalizing large financial institutions, reducing the amount of bank loans relative to their deposits and encouraging industry consolidation, Geithner said.

At the same hearing, Federal Reserve Chairman Ben Bernanke concurred that threats from Europe's debt crisis have cooled in recent weeks. But he warned that U.S. banks remain significantly exposed to conditions in larger European economies, noting that American money-market funds remain vulnerable to a continuing decline in the region. Roughly 35 percent of assets in U.S. prime money-market funds are in European holdings. 

"U.S. financial firms and money market funds have had time to adjust their exposures and hedge their risks to some degree as the European situation has evolved, but the risks of contagion remain a concern for both these institutions and their supervisors and regulators," Bernanke testified. "In particular, were the situation in Europe to take a severe turn for the worse, the U.S. financial sector likely would have to contend not only with problems stemming from its direct European exposures, but also with an array of broader market movements, including declines in global equity prices, increased credit costs, and reduced availability of funding"

[luadda22]

Why is this still on this site???? Doesn't CBS have people that can update with more current events or is someone at CBS in love with Timmy the Tax Cheat?

[jesills]

Someone should tell Mr. Geithner that using drugs is illegal, even in Washington...

[credibility2]

Geithner doesn't know what he's talking about. On the BBC this morning, the Eurozone economists declared that the crisis will deepen and more than likely pull down the U.S. economy. No one should believe anything this guy says. Remember, he was president of the NY Fed, gave money to Goldman Sachs in 2008 and tried to skip out of paying his taxes. Geithner is another know-nothing troll for the president.

[sandiegopete]

No one should believe anything this guy says.

I agree with that.

[involved_indi]

Just got back from France. They are taxed and fee'd to death and the debt crisis is just starting. Apparently Geithner is a bigger fool than he appears at first glance.

[Martha12345]

Timmy doesn't know his axx from a hole in the ground.

[haddada-2009]

This is so comical, it is hard to even take this guy seriously. Even e goes home and looks in the mirror and has to ask himself if he really can say this stuff with a straight face.
But Oblamer is going to use this guy as the excuse for why his presidency failed

[gep1955]

This article is nearly two months old. Why do you continue to display false and misleading statements from Tax Cheat Timmy. Is it to soothe those that don't follow the international markets? What does CBS stand for? Carry Barak's S**t

[jim_davis12]

Whoa! If the crisis in Europe is gettgin better, who will Obama blame? What can he claim is washing up on our shores to hurt his economy?

[nonpolitico]

Sorry, but I watch BBC World for the true facts about the EU!

Fact 1. is that the EU financial mess was begun when the EU began as a Political idea, not an idea similar to the US in 1776!
Fact 2: Greece has over 200,000 citizens on the streets.
: Spain...almost broke cos of EU politicians 6 cities brought to a standstill by riots.
: UK Tanker drivers/teachers/nurses/doctors/civil servants all to strike in near future.
(And these are just the beginnings of the unrest).

Total EU Debt could be double that of the USA!!!
And Geitner says EU is "looking up"???
Just shows he should be selling tickets at the Iowa State Fair, and that may be a little taxing for him!

Obama and his crowd will not be able to put US right, and there are doubts that any alternative can either!

Normal folks will just keep going, buying what they can and cutting up the extra credit cards, and just feeding the family and taking care of basics.

Think about it, if the people of Greece/Spain/France/GB/Portugal are ALL tightening their belts and reducing their total spending, even on essentials, HOW CAN the EU begin to recover??

(And still the Eurozone continues to bring in new legislation which affects all citizens ACROSS 27 nations!!!)

The next US president,whoever it is, will be unable to make much of a dent in the debt, or the state of the Union!

Also, China among other Eastern nations are also looking at cutting domestic consumption.
Anyone read tealeaves, or know a good phsycic??

[jdaryyl]

One of the many Traitorous Global Crooked Banksters who are running us directly into the ground. He is GLOBAL and has no love for America. He breathes, he lies, he craps, he lies, average American believes, average American suffers, average American watches American Idol, American Football and thinks we should harm Muslims to make life for us better.