After a nasty week in which he had to face both House and Senate committee questions about his intentional coverup of criminal rate-fixing activity by banks in the LIBOR case, not to mention the impact of LaRouche PAC's heavy organizing deployment in Washington over the course of the week, U.S. Treasury Secretary Geithner will be skipping town next week and heading to Europe.
Geithner will hold separate meetings on Monday in Germany with ECB head Mario Draghi and German Finance Minister Wolfgang Schaeuble, and with Bundesbank head Jens Weidmann sometime before the Thursday, Aug. 2 meeting of the ECB Governing Council. The Schaeuble meeting will take place on the German island of Sylt on the afternoon of July 30 (there will be no press conference afterwards), and he'll meet in the evening in Frankfurt with Draghi.
Among the topics on the agenda will be Draghi's promise earlier this week to do "whatever it takes" to help bail out Spain and Italy's creditor banks, which was widely read by financial markets as a signal of major hyperinflationary bailouts to come. FT Alphaville reports that Draghi's proposal is to have the financial bailout funds (EFSF and ESM) buy government bonds on the primary market, "flanked by ECB purchases on the secondary market." Draghi is in favor of the ECB giving the ESM a banking license, but that "is a long-term aim of Draghi's, [and] it is not part of the immediate crisis plan," according to an unnamed ECB official. The Bundesbank was quick to disagree with Draghi's call for money-printing, which will be on the table at his meeting with Weidmann.