Tuesday, April 19, 2011

Tim Geither Attempts To Rebut Implied S&P Criticism Of U.S. Finances

Given the amount of press coverage sparked by S&P putting U.S. Treasury debt on a negative-outlook watch, it's not that surprising that Treasury Secretary Tim Geithner would hit the media circuit debunking the agency's view of the United States government's finances.
S&P cited political gridlock on deficit reduction as a key reason for the debt warning. Geithner said it is clear the prospects of a budget deal have improved if you "listen carefully." "I think things are better than they have been if you want to think about the prospects for improving our long-term fiscal position," Geithner said.
He also fell back upon the low interest rates currently paid by the U.S. government on Treasury debt.

Although the Treasury market has been distorted by the Fed's QE2 program, Secretary Geithener has a point...for now. Those who think that T-bonds are in the climax of a bubble won't be impressed by the last argument. As for the first part of it, he's making promises.

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