The Savior of the World Economy?

The Name of the Future U.S. Treasury Secretary is Revealed

On Monday the new U.S. President-elect Barack Obama announced the composition of his economic team — that is, those individuals who must overcome the financial crisis. At the time when this article was sent to the press, the “saviors” had not yet been formally presented to the public, but their names were already being discussed with a vengeance. For example, Timothy Geithner, President of the Federal Reserve Bank of New York, is likely to become the U.S. Treasury Secretary.

It’s been less than a month since Obama was elected, and the newly-picked head of state (though he doesn’t officially have that post yet) is already getting things done. Currently, Obama’s most important task is forming the cabinet, with Secretary of the Treasury being one of the key positions, now more than ever. Recall that the current Secretary of the Treasury is Henry Paulson, whose credibility was marred by the financial crisis.

Obama decided to replace Henry Paulson with Timothy Geithner. Geithner is currently in charge of the Federal Reserve Bank of New York, and according to White House sources, he has extensive experience in overcoming the consequences of the crisis. It’s true that Geithner battled financial misfortunes in developing countries such as Mexico, Indonesia, and Korea. Now he’ll have to do battle in the U.S.

The head of the National Economic Council has also been selected. This post will be held by Larry Summers, a former Secretary of the Treasury under Bill Clinton, and a professor at Harvard University.

Those men will have to develop and implement the new administration’s anti-crisis plans. New measures to support the U.S. economy are already on the way. The plan provides for an approximately $500 billion increase in the budget expenditures and tax payments.

For now, the old administration is still in charge. It’s trying to save those who can still be saved. For example, the giant Citigroup, which is in a truly tragic situation. The bank has been losing money for the past four quarters. The head of the corporation announced the intent to cut an additional 52,000 jobs. Last week, Citigroup’s stock price fell by 60 percent. The anxiety was fueled by the fact that the investors predicted billion-dollar losses.

To prevent a complete failure, the Treasury Department allocated $20 billion to the corporation. Treasury threw this “generous” life preserver in order to avoid chaos in the world financial markets. After all, Citigroup is the world’s largest financial corporation, and has locations in more than 100 countries around the world. According to the joint statement by the Treasury Department and the Federal Reserve, the government’s effort to rescue Citigroup is intended to “strengthen the financial system and protect U.S. taxpayers and the U.S. economy.”

The number of such banks that require support has been steadily growing. Since the beginning of the year, 19 major corporations have been unable to deal with the crisis. The Treasury has been unable to do anything except give out tidy sums to stabilize the situation.