Timothy Geithner: There was never any risk that the US would not meet its debt

Washington: US Treasury Secretary Timothy Geithner lashed out at S & P’s decision to downgrade the US credit rating. In an interview to CNBC, he said that the move reflected utter lack of knowledge on part of the credit rating agency and was a terrible judgement call. He added that the President and the government had been working hard to ensure that America’s debt crisis was reduced and felt that it was unlikely that the United States would sink back into recession, and that the government has the tools to counter slow growth.

According to Geithner S&P did poor work when looking at the maths of the budget crisis in America and their decision to downgrade the US has caused a lot of damage.

Geithner showed confidence in the regenerative capacity of the American Economy adding that there was no risk that the US would never meet its obligation. “I know there’s this perception around there that there’s no room for policy, but it’s a deeply mistaken perception,” he told CNBC television.

“In countries around the world, not just in the United States, we have plenty of room to do things to help make this economy strong in the short term, and it’s our responsibility to do that,” he said.

Asked if the United States was at risk of a new recession in the wake of Standard & Poor’s first-ever credit downgrade of the US government, Geithner said “I don’t think it’s likely.” He said much depends “on the quality of judgment of governments and central banks around the world.”

“If you look at the world, growth has slowed, but there is a lot of room for central banks and governments to act in order to help deal with the pressures we’re still seeing around the world.”

In recent weeks numerous economists have warned that US growth has slowed so much that it risked entering another period of negative growth, only two years after the last “Great Recession” ended.

Analysts worry the Treasury, the Federal Reserve and other authorities have too few tools available to stimulate growth, especially given pressure in Congress and now from the ratings agencies to slash spending in order to reduce the country’s huge debt.

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With inputs from AFP