One of the big headlines from Tim Geithner’s CNBC interview was his comment about how Europe won’t have a Lehman Brothers.
Jim Cramer made a huge deal of this, saying that the big fear that everyone had, was now off the table, and he took Geithner’s comment to mean that leaders knew the need to avoid something catastrophic.
Here’s the problem: If Europe were one country, we’d believe Geithner, because no individual country would let a Lehman happen under its watch.
But when any policy response needs to be coordinated with so many different governments, each of whom have their own political situations, you just can’t be sure that the proper response could get done.
Even if you know a Lehman would be a total catastrophe, you just can’t be confident of the coordinated response, which is why Greek debt is trading where it is, despite everyone not wanting it to default.
Even if Geithner had personal assurances from Merkel that she would prevent a Lehman, it wouldn’t be good enough.
So, while Tim Geithner did a pretty good job at his interview, you shouldn’t feel comfortable with this comment.
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