Geithner says: U.S. is in no danger of losing triple-A bond rating: – The U.S. wasn’t in danger of losing its triple-A bond rating, U.S. Treasury Secretary Timothy Geithner said on Sunday, in the wake of a warning from Moody’s Investors Services about the U.S.’s treasury-bond rating.
“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast today whether a downgrade is a concern. “That will never happen to this country.”
Geithner also expressed confidence that the risk of a “double-dip” recession is receding.
“We have much, much lower risk of that today than at any time over the last 12 months or so,” Geithner said.
Credit ratings agency Moody’s last week warned that weak U.S. growth, on top of already stretched government finances, could put strain on the country triple-A status.
Mr. Geithner noted that when investors were nervous about a global financial crisis, they sought safety in U.S. Treasury securities and the U.S. dollar. “That is a very, very important sign of basic confidence in our capacity as a country to work together to fix these problems,” he said.
Geithner said the risk of a “double dip” recession in the U.S. has declined, particularly given recent reports showing the economy grew at a 5.7 percent pace in the fourth quarter of last year.
The comments of the credit rating agencies must not be trivialized. The issue is not one of collateral adequacy, but rather willingness to pay. Investors and taxpayers in general are very concerned at the current financial/economic scenario, in large part because the Federal government is assuming ever larger authorities over market and economic functions, at the expense of natural free markets. We remain concerned as to the destiny of AIG, one of America’s leading representative firms in Asia. While AIG did lapse into some areas of bad conduct, and very poor documentary controls at the board level – overall it was a good firm. We remain concerned that the Obama administration has deliberately set upon AIG to be a foil for continuing punishment from the White House. In total, AIG was not much worse than the large banks, however, as an insurer it was (and should still be) subject to the authority of the New York State Insurance Commissioner – not under the control of Federal authorities. The purported giant emergency within AIG, we believe, was largely contrived by the Federal authorities, including Mr. Bernanke and Mr. Geithner. Rather than let the firm rationally unwind its thorny positions – Mr. Bernanke and Mr. Geithner mis-used their authority to harm AIG, largely to benefit the better-connected competitor firms Berkshire Hathaway and Goldman Sachs. The documentary shortfalls, which were the clear responsibility of Mr. Greenberg, the ex-AIG Chairman, must not be repeated – however, nor should the abuses which were heaped onto AIG by Federal representatives whose real agenda was to exploit the misfortune of AIG to benefit their political friends. AIG can now resume its position of leadership in dealings of non-U.S. corporate and sovereign debt, within a reasonable phased re-start process, and participate in better-rated international insurance syndicates. Dealings in credit derivatives should be phased out in favor of core operations.
Matt Lechner – CFP, CRPS, FRM
Chairman – WSSIG, the Wall Street Special Interest Group
“supporting and growing America’s interests in the global capital markets”
4714026@optonline.net