Greenspan Challenges Geithner
Obama and his team of advisers at the G-20 summit aren’t getting much help from former Federal Reserve Chairman Alan Greenspan. All seemed well and good when he criticized China’s devaluing of the yuan in a Financial Times op-ed today, saying China “has not yet chose to take on the shared global obligations that its economic status requires.” But Greenspan also had some tough words for Washington, writing that “America is also pursuing a policy of currency weakening” to, as other countries see it, the “competitive disadvantage” of the rest of the world. Treasury Secretary Timothy Geithner responded on a CNBC interview this morning. He asserted that the United States “will never seek to weaken [its] currency as a tool to gain competitive advantage or to grow the economy.” Though he has “enormous respect” for Greenspan, Geithner said the Fed chairman is way off the mark when it comes to the Fed’s policies and today’s markets.
In the same interview, Geithner commented once again on China’s currency policy. He said that Beijing will face higher inflation and asset appreciation if it continues to resist market forces that are pushing the value of the yuan up. And the longer countries like China resist, the treasury secretary said, the more problems will be caused for governments that have more flex in their currencies.
After an eight-month-long stalemate in Iraqi politics, it looks like progress is finally being made. Politicians were able to come to an agreement to form a government late yesterday. Nuri Kamal al-Maliki will continue on as prime minister, and his rival Ayad Allawi’s bloc will get the position of parliamentary speaker and the head spot on a new national-security committee. Vice President Joe Biden’s national security adviser Anthony Blinken said that the “apparent agreement to form an includsive government is a big step forward for Iraq.”