Wall Street & Markets

Geithner goes for a laundry list, not a dramatic gesture

By Justin Fox | February 10, 2009 | +

Treasury Secretary Tim Geithner has just finished his first big speech. The contents had already been so widely reported that there weren’t any big surprises. 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.

Stock market investors appeared to be disappointed, with the S&P 500 now down about 3.5% on the day. Then again, stock market investors are easily disappointed ninnies.

There are two cures for financial panic: dramatic action and the passage of time. Geithner seems to be of the opinion that, with the panic substantially abated since last fall but a lot of expensive problems remaining, the moment for dramatic action has passed. He reportedly fought off efforts by others in the Administration to come up with something more crowd-pleasing today. A long slog it is, then.

Related Topics: Economy & Policy, Wall Street & Markets

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  • hotbbq

    A long slog it is, then.
    I’d like to think that the quality of the lesson learned from this whole fiasco is directly proportional to the time it takes to recover from it. It we suffer substantially for an extended period of time, we will be less likely to suffer from short term memory loss.

  • http://www.124monkeys.com Sean DeCoursey forgot his password

    Maybe I’m dumb and missing something obvious here, but I still don’t know why no one in the government or economic press is talking about distillation. That is, consolidating all these bad assets and then breaking them up into their component parts so we can get whatever real value is buried in them out and then rework or foreclose or eat the loss or whatever on the true, total junk that’s left.

  • bryanfromhouston

    I retract my name of HotSauce for TARP II. It should be referred to as Zombie Economics.
    -
    Zombie Economics, unlike Voodoo Economics, might work but it will take a long time and a good bit of experimentation to figure out how to behead the walking dead of assets which are still hidden on the bank’s books.
    -
    From hence forth, I will refer to any plan that helps troubled assets as Zombie Economics!

  • curmudgeon57

    @Sean: I think the main problem there is that it’s too early to tell what the real value might be on a particular asset. Without a market, the value may be nil. With a more liquid market, it may be substantial.

  • http://www.124monkeys.com Sean DeCoursey forgot his password

    Curmudgeon,
    -
    That’s kind of the whole point of distillation. You (the govt) just arbitrarily guesses at a price, buys EVERYTHING at that price, then distills and sells everything out. Because you know, we actually CAN price the little bits and individual pieces these big complex securities are made of.

  • curmudgeon57

    Possibly. But our masters in government are afraid to pull that trigger, afraid that they may guess wrong on that price and be really on the hook for a trillion dollars or so. History would probably treat them unkindly, and history is really the only benefit of senior government service.

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