US insists eurozone has firepower to fight crisis
(WASHINGTON) - US Treasury Secretary Timothy Geithner repeated Wednesday the Obama administration's view that the eurozone has enough resources to resolve its public debt crisis.
"The leaders of Europe have decided they're going to do whatever it takes to make this work and make it hold together. And they can do it, I think they have the resources and the ability to do it," Geithner said in response to a question at a Chicago conference, streamed live on the Internet.
President Barack Obama's administration has faced International Monetary Fund appeals for a US contribution to boost the global lender's financial resources.
On Tuesday, IMF managing director Christine Lagarde called for the world's biggest economy to support the Fund's efforts to boost its firepower to fight crises.
But that appeal has little chance of being heard due to domestic US politics in an election year.
Geithner praised the 17-nation eurozone for making progress in handling the financial troubles of Greece, Ireland and Portugal, bailed out by the European Union and the IMF, and the negative fallout on the rest of the bloc.
"Those are promising, very important steps towards coming out of this crisis and reducing the risk the crisis poses to the United States and countries around the world," he said.
Geithner, though, warned of stiff challenges ahead despite the eurozone deal Friday to erect what it claimed was a more than $1 trillion firewall against financial turmoil.
"They have a long way to go. It's going to be a very fragile and uncertain process, terribly difficult for them to go through," he said.
"And that's why this -- what they call firewall, the combined actions of the central bank and governments through these funds, are so important. Because those things have to be in place to be credible."
But Geithner noted the difficulty in balancing growth and austerity measures.
"The biggest mistake governments make in financial crises is to put the brakes on too precipitously," he said.
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