Treasury Secretary Tim Geithner will get another opportunity tomorrow morning to "try" to ease the public's skittishness with our economy...specifically, the financial sector. I have a very bad feeling that this may be the last strike for our Doogie-Howser look-a-like.
His first strike came when he had to sheepishly admit that he failed to pay over $34,000 in taxes, yet he still felt he deserved to run the institution that demands we pay ours. Yet the President stood beside him and assured us, he was the right man for the job.
Strike two came just a few weeks into the new administration when Geithner was expected to deliver all the details of how he/they were going to save our financial institutions. The plan was short of details, and the market tanked in response.
Tomorrow morning, "Little Timmy", as I like to call him, will get an opportunity to try again at laying out "the details". This time, he has had an additional month to prepare his remarks. Unfortunately, I believe he is doomed to fail. I believe the market is looking for the perfect plan, a magic bullet, if you will. Any opportunity to pick apart "the details" or lack thereof, is inevitable. Anything short of perfection will be a bad sign. Details of what Geithner will be laying out tomorrow have already been released. It's already being viewed with skepticism in the media. Basically, the government would offer loans to private investors (hedge funds and smaller banks) to buy up the troubled assets at the bigger banks. I see two immediate problems with this plan. First, and most obvious, who would want to buy assets (with borrowed money, nonetheless) that are virtually worthless and have very little chance of providing a return? Second, what healthy institution would want to accept government money (to buy bad loans) in the face of Congressional shenanigans like 90% taxes on bonuses? Meanwhile, the US taxpayer is out another TRILLION dollars to fund this plan. Have you found any good Tea Parties to attend this year?
Will Geithner be able to deliver tomorrow? You'll find your answer in the market's reaction. Personally, I believe Geithner's stock will fall even farther tomorrow.
The band is playing somewhere, and somewhere hearts are light,
