Geithner accentuates the positive after G7 meeting
By Greg Robb, MarketWatch
Last Update: 4:57 PM ET Apr 24, 2009
WASHINGTON (MarketWatch) - Treasury Secretary Timothy Geithner accentuated the positive in remarks to reporters after a closed-door meeting Friday with top economic officials of the world's seven biggest industrial nations.
In remarks prepared for a briefing with reporters on the Group of Seven discussions, Geithner agreed that the global economy looks a little better recently but that it is way too soon for any victory laps.
"There are signs that the pace of deterioration in economic activity and trade flows has eased," Geithner said.
Without giving any specifics, Geithner said that certain spending measures have stabilized and financial conditions have shown "modest improvement."
The U.S. housing market, the epicenter of the global crisis, is beginning to stabilize, Geithner added.
The International Monetary Fund issued a gloomy assessment of the global economy this week, saying the recession was going to be the worst since the Second World War. But IMF researchers noted some signs of life in the last few weeks, and it was that small section that Geithner highlighted. See full story.
The IMF also reported that the worldwide banking sector could lose 4 trillion before the crisis is over. See full story.
Geithner did mix in some cautious comments.
"We are right to be somewhat encouraged, but we would be wrong to conclude that we are close to emerging from the darkness that descended on the global economy early last fall," Geithner said.
In keeping with his low-key approach to this meeting, Geithner made few waves. He went out of his way to congratulate Japan for new stimulus measures but pointed no fingers at anyone else.
Geithner did draw one line in the sand. He said that the United States would accept nothing less than quarterly reports from the IMF on stimulus efforts from governments to make sure that they were meeting their commitments.
The idea may be to have the IMF put the heat on Germany and other creditor countries to take more action to help restore growth in Europe and Eastern Europe.
Many countries on the outer-edges of the euro-zone are struggling and their ability to borrow from financial markets could be tested later this year unless conditions improve some experts said. See full story.
German officials repeated Friday that they had no plans to enact further stimulus measures.
Edward Prasad, a fellow at the Brookings Institute and a former IMF official, said that continental Europe is still in denial about the scope and magnitude of the crisis.
President Barack Obama and other leaders of the 20 most influential nations of the world met earlier this month in London and set out the roadmap for coming months.
As a result, this G7 meeting was expected to be all about "implementation" and not new initiatives.
As expected, the leaders said they had made great strides over the last three weeks.
The next G20 leaders' summit is expected to take place in New York City in September.
Behind closed doors, experts said, the G7 probably received an update from Geithner on the Obama administration's stress-test for banks. Foreigners, like Wall Street investors, really want to know what will happen once the stress tests are completed.
Results are expected to be released in early May.
The Federal Reserve released its parameters on Friday for conducting stress tests of the 19 largest U.S. banks, employing a methodology that could help investors evaluate the financial condition of the banks.
With these details, investors have more information to divide banks into two categories -- financial institutions that will survive with little additional capital from the government and those that will need more assistance. See full story.