The former Secretary of Treasure of the United States visited Chile and explained his vision towards economy.

Timothy Geithner former secretary of Treasure of the United States and current president of the investment firm Warburg Pincus, visited Chile for the first time as an expositor during a seminar organized by Picton.

As President Barack Obama’s Secretary of Treasure –between 2009 and 2013-, Geithner, together with Ben Bernanke, former president of the Federal Reserve (Fed), played a key role in recovering USA’s economy.

Geithner was interviewed over an hour by the former Minister of Economy, Felipe Larraín.

The former Secretary of Treasure explained the solutions found by the fiscal authorities for a gradual recovery of the largest economy in the world, highlighting as a major quality the labour flexibility of the American market.

Geithner believes this is one of the main differences with Europe, which remains having growth problems and a more rigid labour market. He stated that both economies had unemployment rates over 10% by 2009 and that the US managed to lower it nearly to half, while the Euro Zone remains with similar or superior rates that prior to the crisis.

In his presentation, he pointed out the difference between the European and the American labour policy, which turned out to be a very valuable lesson for us as well as for other countries”, said former president of the CPC, José Antonio Guzmán.

He was optimistic as regards the future of the American economy.

He added that the debt has decreased and that the reforms that activated the US’s financial market contributed in installing a more conservative behaviour in the market, after the regulatory problems experienced in the past.

Geithner pointed out that one of the major problems lived during the credit boom was caused because of a “lack of memory” regarding the existing risks, and that most of them were in the financial system. He stated that a paradox was created: the Central Bank must create stability in time and that may cause an excess of economic confidence.

Geithner established that the United States could avoid worse results and that subprime crisis could have been 5 times bigger than the Great Depression of 1929.

One of the main communicational difficulties was convincing people that the measures taken in the Trouble Asset Relief Program (TARP) – which invested US$ 700 thousand million- was going to benefit everyone and not only Wall Street’s bigwigs.