The Geithner Plan
The stock market responded with almost 500 points of enthusiasm to the Obama/Geithner bank plan today. Somehow, given the last year of history in financial services, a plan that garners this much enthusiasm on Wall Street doesn’t inspire my confidence. After all if your friend bet big and lost, then assures you he know what he’s doing would you trust him?
In his NYT article Paul Krugman says:
“And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.”
We have demonstrably proved that the bankers don’t know what they’re doing in our current situation. This plan is because they have no way to figure out the value of many of their assets. Valuing assets is a fundamental banking task after all.
I’m not taking a position on if Geithner should keep his job, that’s a separate question. And I’m not expecting that the Obama team will solve this in three-four months either. It took us a while to into this mess, unfortunately it’ll take a while to get out of it. I want this plan to work, but I lack confidence.