From a McClatchy news story, At G-20’s closing, Obama prods Europe to boost growth, I have taken the following quotes:
Treasury Under Secretary Lael Brainard told reporters Monday that the administration expected to see “a high degree of resolve to work together to address financial market tensions and more clarity about the need to strengthen demand.”
Treasury Secretary Timothy Geithner said the Europeans were designing the “financial architecture” to secure their financial system, including seeing that especially hard-hit countries like Spain and Italy that are making long-term reforms can borrow at existing low interest rates.
“Those two things are very important,” he said. “Not just the long-term reforms to build a stronger Europe, but the immediate steps to make sure that they’re stabilizing their financial systems and making sure these reforms can really work.”
And he said the Europeans have agreed to a focus on economic growth, “because of course, for these reforms to work in Europe over time, Europe needs to grow faster.”
Brainard said there had been a “noticeable shift in the European discussion recognizing the critical importance of supporting demand and job growth,” and she said the Europeans were looking at supporting project bonds and strengthening the European investment bank. Asked whether the shift included the German contingent, Brainard said it did.
“I think you’ll see it both in the documents and in their discussions,” she said.
In my recent conversations, I have spoken to two people who I thought were diehard Obama supporters in the current Presidential contest, and yet they don’t seem to understand the wisdom of what Obama is trying to do about the European situation. Even the Treasury Secretary, Tim Geithner, seemed to be slow to catch on, but he has come around to the accepted macro-economic view of what is ailing the world economy.
I know how hard it is to understand how macro-economics differs from micro-economics in a few key aspects. As hard as I try to explain it, people who have a strong moral view about about actions taken in the micro-economics realm cannot seem to let some of these ideas go when thinking about macro-economics.
As an engineer and as a sailor, I know that sometimes what applies in the small absolutely must not be tried in the large. What I did sailing my 11 foot Sunfish sailboard did not always apply to my 26 foot sailboat. (By volume and weight, the 26 foot boat is 13 times bigger than the 11 foot boat.) I also know that no small boat sailor would have been aware of the problem that occurred when the QE2 sailed near Martha’s Vineyard at a speed that increased its draft beyond the depth of the water it was in. (The QE2 is on the order of 57,000 times the weight and volume of my 26 foot boat.)
People who run really big things have to be aware of all sorts of effects that people who run small things never have to worry about. It is impossible for people who run small things to even imagine the issues confronting people who run big things. People who only run small things need to read about the problems that occur with big things with an open mind. If they cannot fathom (pun intended) the concept that there are differences between the large and the small, they simply dismiss what the read about the problems of the large. I am hoping that the boating analogy used above can be mind and eye opening to the possibilities.