The Financial Landscape: Geithner Gossip Groundless; DSK Case Dissolving

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Case Against Strauss-Kahn Near Collapse: Investigators have turned up serious doubts about the credibility of Dominique Strauss-Kahn's accuser, undermining the case against him. The New York Times reports that "forensic tests found unambiguous evidence of a sexual encounter between Mr. Strauss-Kahn," the former managing director of the International Monetary Fund, and the woman, an immigrant from the African nation of Guinea; "But prosecutors now do not believe much of what the accuser has told them about the circumstances or about herself."

She seems to have given incorrect information about her application for asylum, saying it included the story of a previous rape, which was missing, and offering a different account of her experience with forced genital mutilation in Guinea. The woman also appears to have personal and financial ties to people involved with drug dealing and money laundering: According to officials, she "had a phone conversation with an incarcerated man within a day of her encounter with Mr. Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him. The conversation was recorded."

On Friday, Strauss-Kahn, 62, who had been confined to an expensive loft in TriBeCa, was released from house arrest. Lawyers are currently discussing whether to dismiss the felony charges against him, which include attempted rape. Misdemeanor charges are still possible.

Geither Gossip Groundless: Citing unnamed sources "familiar with [Timothy] Geithner's thinking," news outlets reported Thursday evening that the treasury secretary might leave the Obama administration after negotiations over lifting the debt ceiling (and reducing the deficit) are completed.

According to Bloomberg, which broke the story, "Geithner, 49, has told associates he needs a break from government service after dealing with the turmoil that followed the collapse of Wall Street firms, including Bear Stearns Cos. and Lehman Brothers Holdings Inc., first as president of the Federal Reserve Bank of New York and then as Treasury secretary."

In response to the rumors, Geithner, speaking at the Clinton Global Initiative in Chicago insisted, "I live for this work. It's the only thing I've ever done. I believe in it. We have a lot of challenges as a country. I'm going to be doing it for the foreseeable future."

Geithner is the last remaining member of Obama's original economic team, having been preceded out the door by Office of Management and Budget Director Peter Orszag, Council of Economic Advisers Chair Christina Romer, National Economic Council Director Larry Summers, and Romer's replacement, Austin Goolsbee. "Of all these departures," The New York Times opines, "Mr. Geithner's would have arguably have the greatest impact. He has become one of the president's closest and most trusted counselors, attending his daily briefings and coordinating the White House's strategy on a range of crucial issues, from financial reform to pressuring China on its currency."

Geithner turns 50 in August, the same month in which he has said the Treasury will cease being able to pay all the country's bills: According to The Wall Street Journal, "The Obama administration believes congressional leaders must agree to a deficit-reduction deal by July 22 in order to raise the government's borrowing limit in time to avoid a default in early August," since drafting and passing the necessary legislation is expected to take one to two weeks. With agreement apparently reached on the broad strokes of a $1 trillion reduction in spending, the sticking point is now tax increases demanded by Democrats, opposed by Republicans.

The Journal notes that "many disagree about what would happen if they don't reach a deal, and it is hard to know for certain because the federal government hasn't defaulted in modern times." According to Nobel laureate economist Paul Krugman, "Failure to raise the debt limit -- which would, among other things, disrupt payments on existing debt -- could convince investors that the United States is no longer a serious, responsible country, with nasty consequences. Furthermore, nobody knows what a U.S. default would do to the world financial system, which is built on the presumption that U.S. government debt is the ultimate safe asset." Krugman also anticipates more concrete consequences -- in his estimation, resultant government spending cuts could "destroy hundreds of thousands and quite possibly millions of jobs."

Secretary Dimon?:
Speculation is rampant about Geithner's eventual replacement. Politico's Morning Money focuses on Jamie Dimon, CEO and chairman of JPMorgan Chase & Co (JPM), an admittedly "high-risk" choice given the left's antipathy towards Wall Street. In a piece published by The New York Times DealBook section, ProPublica's Jesse Eisenger outlines the vast amount of hidden support for banks contained within U.S. government monetary policy, with a glance at Dimon's recent well-publicized criticism of Dodd-Frank reforms (which he voiced rather forcefully to Fed Chairman Ben Bernanke). "The federal government," Eisenger explains, "in ways explicit and implicit, profoundly subsidizes and shelters the banking industry. True since the 1930s, it is much more so today. And that makes Mr. Dimon no capitalist colossus astride the Isle of Manhattan, but one of the great welfare queens in America."

Another Internet IPO: Online game and application developer Zynga is preparing to go public. The company -- which created FarmVille, Facebook's most popular application -- hopes to raise $2 billion and is aiming for a valuation of $15-20 billion. Paperwork could be filed as early as Wednesday, The Wall Street Journal reports.


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16 Comments

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jeff@coluccireal

Why not leave the debt were it is and live within our means. The country takes in enough to pay the debt interest - social security- medicare and medicaid and the air forces. Why give the feds more of our childrens money to spend. I do think some corporate tax loop holes should be plugged but not at the exspence of small business. Lets us 1 - 1.5 million on personal income not the 200,000 to 250,000 the fed wants to use now.

July 03 2011 at 8:33 AM Report abuse rate up rate down Reply
ecmobeaner

Re: Geither Gossip Groundless. Darn!! However, it's best to deal with the devil you know rather than the one you don't.

July 03 2011 at 7:11 AM Report abuse rate up rate down Reply
savemycountry911

Republicans are for personal responsibility. Dems are for gimme, gimme, gimme. The rich don't have enough money to finance this administration's run-a-way spending.

July 02 2011 at 9:46 PM Report abuse rate up rate down Reply
1 reply to savemycountry911's comment
bushsnitemare2

REPUBLICANS ARE FOR PERSONAL RESPONSIBILTY?............HAHAHAHAHAHA..........YES, DAVID VITTER SOLICITING PROSTITUTES. THIS GUY IS NOTHING BUT A SCUM BAG WHO NEEDS TO RESIGN. I THOUGHT IT WAS THE REPUBLICANS WHO ARE GIMME, GIMME, GIMMIE MORE TAX CUTS. THE RICH HAVE MORE MONEY THAN THEY NEED, DON'T FORGET THE TWO TAX CUTS BUSH GAVE THEM..........

July 02 2011 at 10:10 PM Report abuse +1 rate up rate down Reply
billa518

Funny how the debt ceiling apocalypse mirrors the biblical apocalypse - We are told that the world is going to end on a certain day...until that day comes and nothing happens. Then the doomsayers come up with a new date. The gov't was supposed to run out of money in May, then it was June , then it was the 6th of July, now it's August. At what point will people catch on that it's all rubbish created to sell newspapers and political agendas?

July 02 2011 at 1:18 PM Report abuse rate up rate down Reply
1 reply to billa518's comment
savemycountry911

If you think we can continue spending more than we have, you are mistaken.

July 02 2011 at 7:42 PM Report abuse rate up rate down Reply
3 replies to savemycountry911's comment
English language

GOSH!! Geitner has been buddying with Obama since the 'git-go', so, where would this tax-evader who manages our country's 'purse-strings' go since, ALAS, he, too, has NO job experience! NO Wonder this country is in deep decline on all levels, and along with it, our world reputation and support! We have a president who stands in front of a Mid-Eastern drapery and bows to all Sharia/Al Quaeda Haters of the West, while passing off all executive duties to his self-appointed czars and like-minded Alinsky ilk...believing that speeches are all that the Presidency requires of his personal effort...what happened to his initial credo that we not be red/blue but the UNITED STATES??? How many times must we hear him lie or change his slant? Jobs/ reduced Gov't regulation(yes, EPA, etc)..We mean jobs that create growth and longevity...so that excludes bandaid 'projects' paid for by 'stimulus' monies or tax dollars that hire folks just for the length of the project....Why not allow the south to get back to work in the gulf? Why not allow coal and oil production and research? It is now clear that Obama is clueless on good business sense and cares not to promote free enterprise, competition, borderline security and a policy that gives nothing to illegal aliens! News Flash: Hispanics are not so sure about you anymore. We see it was only about getting our vote! Why not admit that Global Warming was a sham and stop the DENIAL! We do not want a one-way-fits all mentality slammed on us citizens by the Gov't from major bills passed behind closed doors in the dead of night, nor do we approve of Executive Order to establish what will and will NOT be the law of the land! ENOUGH!!!!

July 02 2011 at 1:08 AM Report abuse +2 rate up rate down Reply
ivyteainn

This article is playing politics by making Dimon's appointment an issue between liberals and conservatives. Set ideology aside; Dimon is nothing more than another banking stooge. If the Federal Reserve tells him to dump; he will dump. Get these bankers OUT of Washington; they don't represent the people. Corporate America wants to pit so-called liberals and conservatives against one another so they can do as they please while the people argue. Get rid of the Federal Reserve. Vote against ALL incumbents next year. Whether its Perry or Obama; they are nothing more than puppets of Wall Street.

July 01 2011 at 10:27 PM Report abuse rate up rate down Reply
alderaforall

just goes to show, if you have enough money you can get away with anything. Had this woman been raped by someone making far less money, the woman's character wouldn't have been dragged through the mud and the guy would rot in jail for a portion of his life.

July 01 2011 at 7:23 PM Report abuse +2 rate up rate down Reply
1 reply to alderaforall's comment
evd10

I'm sorry to burst your bubble sweetheart, but character is always going to be an issue in she said, he said cases. After the Duke frat boy's fiasco, you'd think that the prosecutors would give these ****** short shrift.

July 02 2011 at 2:52 AM Report abuse rate up rate down Reply
1 reply to evd10's comment
savemycountry911

Bo and Luke?

July 02 2011 at 9:48 PM Report abuse rate up rate down
gmydogbud

The "Tax Cheat", stays on! This is what our country, government has come too.

July 01 2011 at 6:52 PM Report abuse +2 rate up rate down Reply
hustonlaw

Too bad that homophobic characterization spoiled an otherwise on point piece of writing.

July 01 2011 at 1:02 PM Report abuse rate up rate down Reply
1 reply to hustonlaw's comment
evd10

Where the hell is there any "homophobic charaterization" in this article?

July 02 2011 at 4:33 AM Report abuse rate up rate down Reply