Today the long-awaited moment finally arrived -- the unveiling of Obama’s plan to stabilize and repair our financial system. Expectations were high. Obama pulled together a team of the brightest minds from all the best places, so the media told us, and this team has had months to prepare a plan. From mid-September until the November election, Obama led in the polls. He has been President-elect or President for over three months. The whole TARP debate was going on in the last two months of the election campaign. His team certainly spent scores of hours discussing and debating what they would do once in power. And last night, finally, Obama himself said that today Treasury Secretary Geithner would reveal “clear and specific plans” to address the financial crisis.Today Geithner announced essentially the intent to develop a plan and proffered an outline of a few bullet points punctuated with a few big numbers. In reaction, Larry Kudlow, on his CNBC show, displayed on screen the dictionary definition of the word “plan” that bears little resemblance to Geithner’s comments, since the word “specific” appears in it. One guest of his said “we got an outline with a lot of room for audibles.” Another Kudlow guest James Pethokoukis said “Geithner, the indispensable man has become the incomprehensible man in the span of an afternoon.” Kudlow wondered if Obama and his team really have a detailed plan at all – that if you pulled back the curtain, is there only a fat bald guy with no power. But liberal Steve Liesman, CNBC economist and Obama guy going way back, carried water today for his man and threw in the requisite Bush bash, opining that Geithner at least did better than the last administration; he suggested cutting Obama a lot of slack, sympathetically quoting an Obama official as saying “we’ve only been in office two weeks.”
Well, Obama ran for office for over a year, all the while during this brewing financial crisis, won the election three months ago, and days after that showed up on stage with economic advisers. Yet he still doesn’t have a plan with details? Obama and his team have been talking economic doom and gloom for a while, including last night, and exclaiming the need for urgent action, yet they still don’t have a plan with details.
Kudlow's critique at his weblog Kudlow's Money Politics includes this (link):
Geithner had no real plan to deal with the problem of unmarketable toxic assets on bank balance sheets. He offered no new architectural structure, no good way to remove the toxic assets, no clear pricing or funding proposals, and no meat on the bones.Geithner’s announcement of his plan to develop a plan disappointed the stock market, which fell almost 5%. Tim Paradis of the Associated Press writes (link):
Investors are frustrated with the government's latest bank bailout plan …. what they saw as a lack of specifics from Treasury Secretary Timothy Geithner on how the government will direct more than $1 trillion in public and private support to the financial system…. "The good news is they are going to spend a trillion dollars, the bad news is they don't know how," said James Cox, managing partner at Harris Financial Group…. Geithner's speech "basically puts a spotlight on the fact that the government has no idea how to fix the problem," said Jeff Buetow, senior portfolio manager at Portfolio Management Consultants.James Pethokoukis writes (link) at his Capital Commerce weblog at US News & World Report:
Treasury Secretary Timothy Geithner has gone from being the Indispensable Man to Indecipherable Man. With global financial community watching closely, Geithner laid out a confusing rescue plan for the U.S. banking system that did little to stem the ongoing dissipation of investor confidence. The reaction from Wall Street was withering. "The bottom line from the Geithner speech is that it was too general, and it lacked the specifics needed to it to be credible," opined economist Brian Bethune of IHS Global Insight…. Little wonder why stocks plunged and investors rushed to buy safe U.S. Treasuries. This might have been the clincher as far as investors are concerned: "We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it." In other words, "We have a concrete and highly detailed plan to develop a concrete and highly detailed plan. We'll get back to you."After months of deep thought, this is the best Obama and his Brain Trust could come up with.
John M Greco
