EU Should Be Vary Wary of Geithner's "Solutions"

Tim Geithner appears to be enjoying himself lecturing the Europeans on required "stimulus" programs to solve the debt crisis. Europeans should be skeptical, however. Geithner, who has never held a job in the private sector, proved himself in 1997-98 to completely misdiagnose the Asian crisis and impose a failed IMF solution on the region, to disastrous effects.

Ten years later, not many people remember Geithner's role in the Asian crisis, but former Australian prime minister Paul Keating sure does - and he savages Geithner in this April 2009 article.

In a speech to a closed gathering at the Lowy Institute in Sydney on Thursday, Paul Keating gave a starkly different account of Geithner's record in handling the Asian crisis: "Tim Geithner was the Treasury line officer who wrote the IMF program for Indonesia in 1997-98, which was to apply current account solutions to a capital account crisis."

In other words, Geithner fundamentally misdiagnosed the problem. And his misdiagnosis led to a dreadfully wrong prescription.

Geithner wants experiment again - this time in Europe.