Saturday, June 13, 2009

Was Geithner Put on the Hot Spot in Lecce?

The communique by the G8 finance ministers at the close of their meeting in Lecce, Italy contains this curious paragraph:

We discussed the need to prepare appropriate strategies for unwinding the extraordinary policy measures taken to respond to the crisis once the recovery is assured. These ”exit strategies” which may vary from country to country are essential to promote a sustainable recovery over the long-term.
Did someone ask Geithner how the Fed is going to unwind the nearly doubling in the monetary base? That's the biggest "unwinding" that I am aware of that will need to be taken care of.

The statement went on:
We asked the IMF to undertake the necessary analytical work to assist us with this process.
Clearly, the IMF is the new "go to" organization. The U.S. must feel that they have enough influence at the IMF to direct matters in a direction they will be happy with.

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