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Geithner's Financial Recovery Falls Flat   February 10th, 2009
Initial reading of "plan" seems to suggest it's insufficient       

 
QUICK OBSERVATIONS

More observations...
 

Late last week and over the weekend it seemed the administration was leaning towards a Republican plan of insuring toxic assets rather than some less effective alternatives. However, now that Treasury Secretary Geithner has announced the plan, my initial reading is that not only doesn't it include that rather common-sense approach, it seems lacking in any concrete strategy.

http://money.cnn.com/2009/02/10/news/geithner.plan.fortune/index.htm

The key points in the administration's new Financial Stability Plan include:

1. Testing the health of big banks to weather an even deeper economic downturn

2. Making credit more available to consumers and businesses.

3. Creating a private-public partnership to take toxic assets off banks' balance sheets

4. Addressing the housing crisis.


I haven't had an opportunity to read the transcript of Geithner's proposal--I'll do so later. But at this point it wouldn't seem that the proposal would give anyone any significant expectation that the problem is going to be solved.

I'll write a new comment later today on this topic when I've had a chance to more thoroughly review the proposal.

Update 30 Minutes Later: Apparently the market isn't too impressed by Geithner's "plan" either... the Dow Jones plunged 250 points within half an hour of the announcement.

Update 45 Minutes Later: It would seem that after waiting for so long, the market was waiting for a pretty darned concrete plan from Geithner, something the market could sink its teeth into and really evaluate. It would seem that, more than anything, we got vagueness that really hasn't given the market a warm fuzzy feeling.

Indeed, that's being confirmed in news reports: http://www.ft.com/cms/s/0/1a2106a6-f773-11dd-81f7-000077b07658.html

Alan Ruskin, senior analyst at RBS's global banking and markets division said earlier that the leaked excerpts looked 'worryingly short of new initiatives; short on detail on the main fresh initiative; and, short on the confidence factor that this will all work out fine.'


Exactly what I was thinking.

Update 8:30pm: I subsequently wrote a follow-up comment discussing the lack of real content in President Obama's first press conference and the lack of content in Geithner's plan this morning.


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