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What Geithner 'Stress Test' Book Implies for ECB

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NEW YORK (TheStreet) -- Tim Geithner reveals in his new book "Stress Test" that European leaders liked to refer to the former Treasury Secretary as the "smiling hegemon," so don't expect them to be especially eager to hear what he has to say.

But Europe's economy is slowing down, and some observers fear stagflation is in the cards.

David Tepper, one of the world's most successful hedge fund managers, said Wednesday that the European Central Bank had better ease interest rates in June, or things could get scary.

Would Geithner agree with Tepper?

It's a pretty sure bet he would.

Chapter two of "Stress Test" describes how Geithner spent the late 1990s at the Treasury Department helping fight fires around the globe-in Mexico, Thailand, Indonesia and South Korea and Brazil-with mixed but generally positive results. In each case, Geithner recommended throwing money at the problem.

"I was usually on the aggressive side when it came to intervention--and the permissive side when it came to conditionality," Geithner writes. One notable exception was Russia, which he says he recommended allow to default, as it did in 1998.

"I thought it would be crazy to throw good money after bad. Russia looked hopeless then, financially and politically," Geithner writes.

It is hard to imagine Geithner would say the same thing about Western Europe today. His biggest fear in the late 1990s was that Europeans would get in the way of the Americans' efforts to bail everyone out.

Referring to the "more conservative European countries," Geithner writes, "we didn't want their occasional parochialism and moral hazard fundamentalism to paralyze future crisis responses."

So just as he showered bailout money at big banks like Citigroup  , Bank of America  while Treasury Secretary even though his staff described them as "financial death stars," Geithner would almost assuredly advocate more generous interest rate policies at the European Central Bank.

Geithner has little patience with those stodgy Europeans who worry that bailouts or easy money encourage even riskier behavior.

In what might as well be his credo, he writes, "it's hard to believe that the existence of firehouses causes fires."

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