Geithner still worried about recovery
The G-7 meeting in Istanbul ended on October 3, but the worries about the global economic recovery are clearly ongoing. It would be hard to find any of the attendees who believes withdrawing support from the major economies right now is a good idea.
Treasury Secretary Geither said in his closing statement at the meeting, "Planning for an eventual exit is the responsible and necessary thing to do, but we are not yet in the position where it would be prudent to begin to withdraw fiscal and monetary policy support," according to several media reports. That leaves open the issue of what signs will be necessary for the US government to begin to step out of its role as lender of last resort for US financial firms and a major shareholder in banks and insurance companies.
If AIG (NYSE:AIG) and Citigroup (NYSE:C) are any indication, that answer is that the Treasury and Fed will not be withdrawing their support any time soon. These firms, among others, still hold toxic asset. More importantly, consumer and business credit defaults and expected problems with commercial real estate loans and ARM mortgages are projected to continue to cause more remarkably high losses.
It is one year since the TARP program was launched. If the economic recovery is sluggish it may see s second birthday.
Douglas A. McIntyre is an editor at 24/7 Wall St.