April 9, 2008
HP-915
Prepared Statement by Treasury Under Secretary David H. McCormick
in Advance of G-7 Finance Ministers and Central Bank Governors Meeting
Washington − Good afternoon. The G-7 Finance Ministers and Central Bank Governors will hold their next meeting here at the Treasury Department on April 11, against the backdrop of the IMF and World Bank Spring meetings. A good part of the G-7 meeting will be devoted to current economic conditions, financial market developments, and the policy response to recent financial market turmoil. They will also discuss progress on the reform of the International Monetary Fund among other topics.
Our G-7 colleagues will be keenly interested in hearing first hand about the U.S. economic outlook, and Secretary Paulson will tell them that the housing correction, financial market turmoil, and high energy prices are weighing on U.S. economic growth. There are significant downside risks to the outlook, and we are taking action to support the economy as we work through these challenges.
Analyst Recommendation to Treasury Secretary Henry Paulson (and Fed Chairman Ben Bernanke):
Call it the “20 times 1, 10 and 100” or “the 20, 200, 2000” pitch:
While both the Fed and Treasury have brilliantly together, crushed the credit crisis, there still remains the issue of the dollar crisis which if not halted too can lead to economic collapse. The dollar has been orphaned and totally routed the last few years, now approaching 1.6 dollars to the Euro, almost double what it was just 5 or so years ago. A similar situation with the other major currency, the Japanese yen, hovering now at 100 yen to the dollar.
This G7 meeting would serve a perfect forum, akin to the Bear Stearns opportunity to halt the credit crisis, to now jointly announce that the Treasury (and Fed) will now after 6-7 years of dollar neglect and resultant freefall, now aggressively “defend the dollar”. That statement this weekend would send shock waves through the global finance and economic communities, sending a message that the U.S. is back and will reassume its currency leadership position, and the place for capital to flow into.
The immediate impact off that statement coming this Monday with oil dropping $20 per barrel, gold plummeting $200 an ounce, and the Dow Industrials soaring 2000 points.
Hen (Hank) and Ben, the ball is now in your court - again. Do the right thing - again.
