This press release came from the Treasury today:
SYLT, GERMANY – The U.S. Department of the Treasury, in conjunction with the German Finance Ministry, today released the following joint statement at the conclusion of Secretary Timothy Geithner’s meeting with German Finance Minister Wolfgang Schäuble:
“Timothy Geithner and Wolfgang Schäuble today met on the island of Sylt to use the informal atmosphere for an open exchange of views on global, U.S. and European economies. They emphasized the need for ongoing international cooperation and coordination to achieve sustainable public finances, reduce global macroeconomic imbalances, and restore growth.
“Both expressed confidence in Euro area member states’ efforts to reform and move towards greater integration. They welcomed the Irish example of placing successfully longer term bonds last week and Portugal’s continued success in meeting program commitments. They discussed the considerable efforts undertaken by Spain and Italy, to pursue far-reaching fiscal and structural reforms. The U.S. and Germany will continue to cooperate closely with their partners when advancing the policy agenda in autumn to further stabilize global and European economies.
“While again stressing the need for policymakers to adopt and implement all reform steps required to deal with the financial crisis and crisis of confidence, Secretary Geithner and Minister Schäuble also took note of statements from European leaders last week to take whatever steps are necessary to safeguard financial stability in the Euro area.”
No one really believes this. It may look like an endorsement of Draghi’s cryptic remarks last week that in essence all policies are on the table (including monetizing debt), but it isn’t. Geithner and Schäuble are talking about two different things. Geithner means ECB buying sovereign bonds and printing the money to pay for it if things still go south (they will). Schäuble means more austerity, bank bailouts, but no debt monetization. By the way, they carefully ignored any mention of Greece.
Beware of statements that try to reassure us that everything is OK. The more they say it, the more it isn’t.
Ignore this appearance of bonhomie.