Can you spot what’s wrong with this picture of U.S. Treasury Secretary Tim Geithner and European Central bank President Jean-Claude Trichet conversing at a G20 photo op?

I’ll give you a few moments to think about it…

If your answer was that the incompetents who played big roles in engineering the worst financial crisis since the Great Depression are now charged with engineering a way out of this mess, you got it right.

As president of the New York Fed from November 2003 until he became the Treasury Secretary in 2009, Geithner was the man in charge of overseeing Wall St. during the creation of the worst credit bubble in history. And since his position as the NY Fed President also meant that he automatically served as Vice-Chairman of the Federal Open Market Committee, Geithner also owns the distinction of being second in charge during what will go down in history as being one of the worst episodes of monetary policy making.

Trichet, who has been running the ECB since November 2003, allowed Greece and other profligate spenders to break EU treaty rules by running up budget deficits far beyond the 3% of GDP limit.

If this isn’t truly a case of having the inmates run the asylum, I don’t know what one is.

“Tightening fiscal policy is the best way for Europe to help the global economy,” Trichet said at the conclusion of the meeting. Meanwhile, Geithner urged it to “buttress weak demand.”

How this is supposed to happen simultaneously is beyond rational thought; it’s exactly the same as getting into an elevator and expecting to go up at the same time you’re going down.

Geithner didn’t stop there: “Stronger domestic demand growth in Japan and in the European surplus countries” is needed, he said, ignoring the fact that people are broke and don’t have jobs. I guess what he means is that consumers should just be issued more credit cards.

Meanwhile, French President Sarkozy went public with Europe’s “beggar thy neighbor” plan for economic growth, saying that he sees “good news from the current euro-dollar rate.”

“I have been saying for years that the euro-dollar rate didn’t reflect reality and was penalizing our exports,” he said, ignoring the fact that Germany is the world’s third largest exporter and currently runs a trade surplus worth 6% of its GDP.

Not to be outdone, The IMF chimed in with these words of wisdom: “Something has to be done on the (Chinese) currency,” Strauss-Kahn told reporters. “The IMF still believes that the renminbi is substantially undervalued.”

I guess what he means is that a 16% appreciation against the euro isn’t enough. Because the yuan is pegged to the dollar, it has effectively gained on the euro by the same amount as the USD has this year. In the view of the IMF, it’s probably a good idea to try and slow the world’s biggest contributor to global growth by appreciating its currency even more going forward. After all, Southern Europe will be going into a fiscally-induced recession over the next couple of years at the same time that President Obama is looking to double exports!

As further evidence that policymakers are on the same page, while Geithner urged “further efforts to restructure and recapitalize the (European) banking system,” Bank of Italy Governor Mario Draghi, a member of the ECB’s governing council, responded by saying  that Europe’s banks are “properly capitalized.”

He may be right. After all, the Fed is swapping dollars for all the euros the ECB can print so that Europe’s banks can indeed remain that way.

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