Photo of the Day

A tunnel through mountainous northwestern Kyrgyzstan

Meet the economist- Timothy F. Geithner

Profile of NY Fed President in FT- a little bit overdone;

Mr Geithner is one of the most powerful economic officials in the world. Yet he still looks more like the gifted young aide of 1997 than an omnipotent central banker. This is partly his youthful appearance - only 46 years old in any event, he looks 10 years younger. But it is also his style, which manages to be casual and driven at the same time.

When he took the stage with Jean-Claude Trichet, president of the European Central Bank, in Davos this year, the visual contrast could not have been greater. Mr Trichet sat bolt upright in a crisp suit, polished shoes and chic tie. Mr Geithner was hunched in his chair, jigging his knee - with a pair of dirty walking boots sticking out of his suit.

People have made the error of mistaking his easy manner for a lack of confidence or steel. In reality, although he is widely described as nice, Mr Geithner can be forceful. "Everyone tends to underestimate him," says a former colleague. "If he was a bigger person physically, people might say he was president material, since he has that aura of power. But because he is slight and he looks young, people underestimate him."

Unusually among senior US officials, Mr Geithner has extensive international experience. He spent much of his childhood in Asia and Africa, where his father was a development expert with the Ford Foundation, completing his high school in Bangkok, Thailand. He studied at Dartmouth and Johns Hopkins before joining Kissinger Associates in 1985 as an Asia expert. He married young to Carole Sonnenfeld, a college sweetheart, and has two children, Elise and Benjamin.

Surprisingly little is known about his private life - Mr Geithner prefers to keep it private - but he is a keen tennis player and an enthusiastic, if inexpert, skier.

Mr Geithner joined the Treasury in 1988 and spent time as assistant attache at the US embassy in Tokyo - witnessing the onset of a decade of stagnation in Japan - before joining Mr Summers's international team under Robert Rubin, Treasury secretary. He rose rapidly, playing a big part in shaping the US response to the Asian crisis.

"He is very bright, independently minded, thoughtful, and has an unusual sense of public service - he is a very easy person to get along with," says Mr Rubin. "He is practical, worldly in the sense that he has a feel for things - for the psychology of markets, the politics of what he is doing - and a good sense of humour." For a high-flying public official, Mr Geithner has remarkably few enemies.

He thinks in probabilistic terms - worrying about "fat tail risks" of adverse possible outcomes even in good times. Long before the credit crisis broke, he led an effort to strengthen the infrastructure underlying the over-the-counter derivative market. But he did not spot how rusty the Fed's liquidity support tools had become, or the vulnerability of the banks to the credit woes, until the crisis erupted, and in the past months has been forced to improvise repeatedly to find ways of pumping cash into frozen parts of the financial system. Recently the Fed has innovated at a remarkable pace. Still, most analysts believe it did too little to contain money market strains in the early months of the crisis.

Peers see Mr Geithner as pragmatic - someone who focuses on what can be achieved and will not let the best be the enemy of the good. Some contrast this with other central bankers, such as Mervyn King, Bank of England governor, who stick more firmly to first principles.

Mr Geithner tends to "smell" his way through situations, a senior central banker says. He attributes this to his background as a Treasury official rather than a high-flying economist or banker - something he shares with Mr Trichet. "The key thing about people such as Trichet or Geithner is that they have come from treasuries - they know how politics and power works," the central banker says.

Mr Geithner is not an intellectual force in the way Mr Summers, Mr Bernanke or Mr King - all professional economists - are. But he understands the issues. "He is incredibly sharp and asks penetrating questions," says Mohamed El-Erian, co-chief executive of Pimco, who got to know him in the Asian crisis. "His approach allows him to identify the key issues quickly and get to the roots of a solution."

For someone who has never worked in the private financial sector, he has a subtle sense of markets' psychology. Yet Mr Summers says labelling him simply a pragmatist sells him short: "I would say he was very much an activist and an internationalist - and these were high principles." Friends say Mr Geithner's experience dealing with crises in emerging markets and Japan, and his coolness under pressure, equip him to handle the current crisis. The US must hope so. As one former colleague points out, there is a big difference between this crisis and those of the 1990s.

"When the crises erupted in Asia there was always the US and the International Monetary Fund there to ride to the rescue," he says. "But this time there is no cavalry." Mr Geithner and his colleagues will have to save themselves.

Big recession, small recession, or near recession?

A Federal Reserve of Health?

Sen. Tom Daschle on The Daily Show

The time is now for us to take this challenge head-on. What we need is a change in approach. In my book, Critical: What We Can Do About the American Health-Care Crisis, I have proposed a Federal Health Board that would be a foundation from which we could address all three problems. In many ways, the Federal Health Board would resemble our current Federal Reserve Board for the banking industry. Just as the Federal Reserve ensures certain standards, transparency and performance for our banking industry, the Fed Health would ensure harmonization across public programs of health-care protocols, benefits, and transparency. Ultimately, the Fed Health would offer a public framework within which a private health-care system could operate more effectively and efficiently.

The Fed Health could help reduce administrative costs. Roughly 30 cents of every dollar in health care is spent on administration rather than health benefits. Our administrative costs, on a per capita basis, are seven times higher than that of our peer nations. Each state has their own system for Medicaid and insurance regulation. We have different health-care systems for active duty military members versus veterans. And private insurers spend billions trying to enroll the healthy and avoid the sick. A Federal Health Board that sets evidence-based standards for benefits and quality for federal programs and insurance will lower this complexity and thus costs.

The Fed Health could also promote quality and save money by making the health-care system more transparent. Today, the lack of transparency in the system makes it virtually impossible for people to grasp what they are paying for and who provides them with the best care. This shroud of secrecy allows for wildly different prices for similar quality care. For example, a Pennsylvania report on heart surgery found hospitals with similar outcomes charge from $20,000 to $100,000. The Board, by ensuring transparency, would increase competition based on price and quality rather than cream skimming and cost sharing.

Tajikistan lied to IMF?

A recent press release from IMF;

Based on new information provided by the authorities to IMF staff in December 2007 and January 2008, the Executive Board concurs that these disbursements were made on the basis of inaccurate information provided by the Tajik authorities relating to the performance criteria on the net international reserves of the Republic of Tajikistan, the net domestic assets of the National Bank of Tajikistan (NBT), and against the NBT issuing directed credits. The Board agreed that the Republic of Tajikistan shall be expected to repay the Fund the three noncomplying disbursements (related to the fourth, fifth, and sixth review) that were not discharged under Multilateral Debt Relief Initiative (MDRI) relief, which amount to a total of SDR29.4 million (about US$47.4 million), together with any interest accrued, in six equal monthly installments starting with the first installment no later than September 5, 2008, and concluding with the sixth and final installment no later than February 5, 2009. The Board expressed its regret on the nature and extent of misreporting, and emphasized the seriousness it attaches to the fact that MDRI resources extended to Tajikistan cannot be made subject to repayment.

In taking its decision, the Executive Board carefully weighed the Republic of Tajikistan's very difficult economic circumstances , in particular its balance of payments position as well as the severe humanitarian crisis prevailing in the country, against serious instances of misreporting by the Tajik authorities. Accordingly, the Executive Board decided to make use of its discretion to extend the repayment period beyond the normal 30-day repayment expectation period called for under the misreporting framework.

Moreover, the Executive Board reviewed matters related to misreporting under Article VIII, Section 5, of the IMF's Articles of Agreement by the Republic of Tajikistan. It found that the Republic of Tajikistan had breached its obligations under Article VIII, Section 5, of the IMF's Articles of Agreement, which obliges member countries to furnish such information as the Fund deems necessary for its activities.

The Run on the Rock and its lessons

Two highly readable Reports on the lessons learnt from the Northern Rock debacle have been published recently. The first is the Treasury Committee Report The Run on the Rock published on January 26, 2008. The second is Financial stability and depositor protection: strengthening the framework published jointly by HM Treasury, the Financial Services Authority (FSA) and the Bank of England on January 30, 2008. The publication of this document launches a consultation on the proposals contained in it for domestic and international action to enhance financial stability. This blog will deal mainly with the Treasury Report.

The Treasury Report covers five areas: (1) Strengthening the financial system through domestic and international actions; (2) Reducing the likelihood of banks failing; (3) Reducing the impact of failing banks; (4) Deposit insurance: and (5) Strengthening the Bank of England and improving the operation of the Tripartite Arrangement.

-Lessons from the Rock

Movie Recommendation- The Real Borat

Nomad: The Warrior