ps. I especially appreciated the Naked Capitalism post, because she seems just as irritated as I am.
The Geithner plan — what the pundits say
It’s not pretty out there, if you’re a newly appointed US Treasury secretary:
Kenneth Rogoff, Harvard professor and former IMF chief economist [via Bloomberg]: The risk is that the market reaction sabotages the plan before it gets under way, forcing Geithner to change his approach in response — a position that his predecessor, Henry Paulson, frequently found himself in. That may mean the plan “may just end being an interim step” .
Paul Krugman blog, NYT: The plan deserves praise for what isn’t in it, at least as far as I can tell. There doesn’t seem to be provision for mass purchases of toxic waste at premium prices; there also doesn’t seem to be a massive “ring-fencing” guarantee against private losses on bad assets. In that sense the plan is better than what the last few weeks of leaks led us to expect.
Justin Fox, The Curious Capitalist: The main message that Geithner seemed to be trying to get across was that, while he had no big plan to solve the financial crisis in one fell swoop, he intended to proceed with more clarity and transparency than his predecessor. Which shouldn’t be too hard. [Geither] reportedly fought off efforts by others in the Administration to come up with something more crowd-pleasing today. A long slog it is, then.
Yves Smith, NakedCapitalism: I cannot recall a major US policy initiative being met with as much immediate revulsion as the so-called Geithner plan. Even the horrific TARP, which showed utter contempt for Congress and the American public was in some ways less troubling. High-handedness was the hallmark of the Bush Administration; it was only the scale and audacity of the TARP that was the stunner… As we, and increasingly others, have said, the Obama economic team is every bit as captive to Wall Street’s interests as the Bushies were. The differences increasingly look stylistic, not substantive. Treasury Secretary Geithner presented today what in essence was a plan to come up with a plan.
Kevin Logan, senior US economist at Kleinwort Benson (HT to Yves Smith): They have a plan for a plan but they don’t really have a plan. The whole proposal is so vague as to create new uncertainty, and maybe the problem is really so bad that they haven’t worked out how to solve it.
Roger Ehrenberg, Information Arbitrage: The equity market certainly bought the rumor of the bailout plan (hereafter referred to as the “Geithner Plan”), rallying like crazy over the past week on nothing but bad news across the globe. But on the day when the big news was finally expected to hit, Treasury Secretary Geithner’s release of his “comprehensive plan,” he said absolutely nothing… I had hoped for so much more coming out of a stirring victory, broad-based enthusiasm and words filled with promise and action. Instead, we’ve gotten a plan and an ideology that appears frighteningly similar to that which preceeded it, which failed miserably by any accounting. No real accountability. No real acknowledgement of the magnitude of the problem. Deeply concerned with stock market reaction today instead of where it might be in three years, five years, 10 years. This is why I’m scared out of my mind.
Felix Salmon, Portfolio: I like the symmetry here. On November 21, when Barack Obama announced that he was nominating Tim Geithner to be his Treasury secretary, the Dow rose 494 points and broke through the 8,000 barrier. On February 10, when Geithner gave his first major speech as Treasury secretary, the Dow fell 273 points and broke through the 8,000 barrier… Geithner promises unprecedented levels of transparency for the new plan. So far, all we have is talk. The markets will wait to actually see the details — and, of course, will wait for Congressional approval of all this — before they start believing.
Joe Weisenthal, ClusterStock (on Geithner’s CNBC appearance after presenting his plan):
Dear Tim (and Obama): Simply saying over and over again, words like honest and clear aren’t actually the same about being honest and clear. Has it occurred to you that it’s this kind of obfuscation — during a time when we supposedly need exceptional clarity — is contributing to the problem?
WSJ — Opinion Journal: Judging by the hissing in financial markets, Treasury Secretary Timothy Geithner’s opening act as Rescuer in Chief yesterday was a bomb. What everyone saw was Geithner at the Improv, a routine with a few good lines but a lot of material that needs more, well, practice… If the goal was to reduce uncertainty, it didn’t work. One problem is that Mr. Geithner’s proposal puts a higher priority on adding more public capital first as a source of financial stability. More public capital also comes with the risk of more public interference or control, especially with Congress looking for heads. .. This is a deterrent to more private investment, to put it mildly. But there is a great deal of private capital ready to take risks again if the Obama Treasury lays out transparent, consistent rules — and if it makes clear that its goal is to restore at the earliest possible date a healthy, privately run banking system.