Geithner defends US stimulus exit

Former US Treasury Secretary Timothy Geithner defended the Federal Reserve's withdrawal of its unprecedented stimulus programme in an Australian newspaper interview Thursday, saying what was good for the American economy would also support other countries.
Emerging market countries have complained about capital flight as the US central bank winds back its quantitative easing, which has pumped trillions of dollars of "cheap money" into financial markets over the past few years.
But Geithner said while he understood the concerns of emerging economies, the Fed's monetary policies needed to be domestically focused.
"I understand it but it's not in their interest for the US to run policy in a way that gives excessive weight to conditions outside the US," he told broadsheet The Australian in an interview promoting his new book "Stress Test: Reflections on Financial Crises".
"That is a world-class problem to have compared to what they faced over the last five years."
The former public servant, who spent four years as treasury secretary in the aftermath of the global financial crisis, said his memoirs gave people "the chance to take a fresh look at the choices we made".
"We live in an inherently messy, risky and dangerous world and there are no easy solutions," Geithner said of the Obama administration's policies during the crisis.
The policies included the controversial $700 billion taxpayer-funded Troubled Asset Relief Programme to bail out Wall Street's biggest banks, which was launched by the previous Bush administration.
"In severe crises that include financial panics it is necessary to protect the average person from calamity, but that sometimes means acting in ways that appear unfair to the average person," he said.
Geithner acknowledged that tranquil financial markets currently appeared to be underpricing geopolitical risk, "but the risks are not comparable to what we faced before 2008".
Australia's Reserve Bank governor Glenn Stevens said in a speech Tuesday it was still too early to know if unconventional monetary policies such as the US's quantitative easing were effective in supporting growth in the wider economy.
"For if some increased risk in the financial sector is part of the process of getting more genuine entrepreneurs in the economy to take the sorts of risk that are part and parcel of restoring the dynamic of growth, that is probably a trade-off worth making," Stevens said.