ROUGH CUT - NO REPORTER NARRATION
The U.S. economy is growing between two and three percent but still faces big challenges to repair damage wrought by the financial crisis, while Europe is making progress, Treasury Secretary Timothy Geithner said on Friday (January 27).
"I think it's probably worth recognizing that we still face tremendous challenges as a country we are still repairing the damage caused by the devastating financial crisis that still has huge lasting impact on the basic fortunes of most Americans," Geithner told a session at the World Economic Forum in Davos.
He also praised a series of steps the euro zone was taking to overcome the crisis but warned of the risk of austerity fueling a recessionary spiral and said Europe needed a bigger firewall to avert future crises.
"Europe is making some progress though, and I think over the last two months in particular they're laying the foundations for a more credible framework, they're making progress on reforms, they are changing the institutions of Europe to put better discipline on fiscal policy. You have three new governments doing some very tough things, you have a ECB doing what central banks have to do. You see them move to try to strengthen, stand by the financial sector but I think the Europeans recognize a sort of unfinished piece of that framework is building a stronger more credible firewall because without that you'll be caught in that trap that you refereed to," said Geithner.
The United States, China and other major non-European economies have said the euro zone should commit more of its own money to crisis management before any increase in the IMF's fire-fighting resources.
If European countries committed to a more effective firewall, Geithner said he expected other economies in the IMF to act to support those efforts.
Geithner was probably attending the annual WEF meeting for the last time as a sitting treasury secretary. He reiterated this week that he would only serve for one term under President Obama. He was asked whether that was his choice or the president's.
"That an excellent way to pose that question. Generally when anybody takes these jobs serves at the pleasure of the president. At the time when we faced so much challenge, so much pressure if the president asks you to do these things you have to do them. And when he asked me to stay, when I though it was the right time to leave, I agreed I would stay. I agreed I would stay to the balance of his term and he accepted that aspiration of mine. And that's where its going to come I think."
