The US government will likely borrow substantially less than initially anticipated, with banks repaying the funds they received during the crisis with interest and more "significant repayments" are ahead, Treasury Secretary Timothy Geithner told CNBC Thursday.
"We are likely to have to borrow substantially less than we initially anticipated to help repair the damage to our financial system," Geithner told CNBC in Singapore. There is also confidence that the US government will bring its fiscal balance in line as growth recovers, he said.
There are signs that stability is returning as Americans save more, the current account imbalance is coming down and there is much greater confidence in the stability of financial system, Geithner added.
He also reiterated his stance that a strong dollar is in the country's interests.
"We are committed to working with countries around the world to make sure that we have a recovery in place, we have a more stable financial system, we have a more balanced pattern of growth globally," he said. "A strong dollar is part of that commitment."
Geithner attended a meeting of finance ministers from Asia-Pacific countries in Singapore, ahead of the start of US President Barack Obama's visit later Thursday.
There is very strong consensus regarding the importance of the Asia-Pacific region moving, over time, to "more flexible market-driven exchange rates," Geithner said after the meeting.
Some analysts have said one of the causes of the global financial imbalances was the fact that the Chinese currency was kept artificially low because of China's restrictions on capital flows and the fact that the yuan is not a free-floating currency.
This has helped Chinese exports, creating the huge trade imbalance between China and the US, according to analysts.
Growth led by domestic demand and a shift to more market-oriented, flexible exchange rates over time are very important for the Asia-Pacific region and for the world economy, Geithner said.
The dollar was flat on Thursday but it has dropped at a steady pace over the past weeks as traders bet that the Federal Reserve will not raise interest rates any time soon.
Geithner did not want to comment on the dollar's current value, but said markets have recovered from the period when the world was facing risks of depression, deflation and financial collapse, which had caused a big rush into US financial assets.
"You're seeing as confidence returns, investors, savers around the world starting to take risk again, that's a fundamentally healthy thing, it's encouraging," he said.
Progress is being made on the legislative front to make sure banks will no longer be able to take the risks that plunged the world into crisis, Geithner said.
"We're going to make sure we put in place comprehensive, fundamental reform of the financial system so you don't see a repeat of the kind of excessive risk-taking that led to this crisis cause so much damage to economies including the US and around the world," he said.
"We've got to do it on a global basis, these markets are global," Geithner added.
And This From Cramer...He is pandering to the Public and pimping Gold
Rising gold prices don’t portend doom as they once did. In fact, Cramer said Wednesday, these days they trumpet good news. He even went so far as to call the present gold rally, with the commodity up 26% year-to-date to $1,117.80 an ounce, “a huge positive.”
How could this precious metal’s affect on the market make such a sharp 180? Cramer offered three reasons.
First, expensive gold equals a weak dollar, and that’s good for American business. The lagging greenback keeps our exports cheap, thereby making our companies more competitive overseas. As Cramer said, Boeing [BA 50.3007 -0.3793 (-0.75%) ] can undercut Airbus and Caterpillar [CAT 59.11 -0.95 (-1.58%) ] can undercut Komatsu. Plus, the money that companies make in euros translates into more dollars, which then leads to earnings beats. And when estimates are beaten, stocks go higher.
Second, high gold prices indicate that deflation’s not a threat. Deflation, which is very difficult to reverse, struck hard during the Great Depression. Costly bullion now means we won’t repeat the experience.
And third, gold’s climb higher is a sign of possible reflation, Cramer said, of prices recovering. While some on Wall Street fear inflation, some pricing strength would do companies a world of good. Again, reflation would help to boost earnings.
Cramer also debunked the myth that it’s dangerous to trade gold as an asset class. Some people think it takes money away from equities. But that wasn’t the case when oil, also treated as an asset class, fetched $147 a barrel. And expensive oil is much more detrimental to the economy than expensive gold. So there’s really no reason, Cramer said, why high gold prices should hurt the stock market.
Of course, Cramer offered a way to play the commodity’s big move. He’d been recommending the SPDR Gold Shares ETF [GLD 108.72 -0.88 (-0.8%) ], which tracks the price of gold, saying it was better, and seemingly safer, than individual gold-miner stocks. But there’s a new ETF that he said might be better right now.
The Market Vectors Junior Gold Miners ETF [GDXJ 25.21 -0.23 (-0.9%) ] just launched on Wednesday, and it allows shareholders to own 38 different medium and small gold and silver miners. Cramer said the fund, with its younger stable of miners, has more room to run than the Market Vectors Gold Miners ETF [GDX 48.89 -1.01 (-2.02%) ], which follows the larger gold miners. And given that the GDX is up 47% year-to-date compared with the GLD’s 27%, the GDXJ could be in store for similar, if not better, returns. Cramer’s bottom line? Don’t fear rising gold prices. They can help the economy and your portfolio.“Gold is good,” he said, “especially when it goes higher.”‘
If the Dollar strengthens EVERYONE AND I MEAN EVERYONE IS INVESTING THE WRONG WAY.
So as Boomer(Cris Berman) would say SO YOU'RE ALL SHORT THE DOLLAR, EH!
The beat goes on...DZZ is 14.43 GLL is 10.24 I am adding to my Gold short today
Mikey
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