Timothy Geithner's debut performance as the new Treasury secretary got him booed offstage yesterday by Wall Street traders. Not for what he said but for all the things he needed to say—and didn't.
Geithner's performance review--a plunge in the Dow that deepened as he spoke and ended down 382 points or almost 5%–may prompt some pundits to question his longevity in the new job.
It's one thing to "screw up" on your taxes (that phrase is the Obama Administration's preferred incantation of Harry S Truman's "The buck stops here"). Screwing up on message is unforgivable, especially in service of a President who prides himself as the next Great Communicator.
Yet it is President Obama himself, not Tim Geithner, who deserves the blame for the skittish sell-off yesterday. The president has mistaken hastiness for urgency, setting arbitrary and unrealistically early deadlines for completing an $800 billion-plus stimulus plan and tightening up Tarp2: The Sequel.
Worse, the O-man brandished frightful hyperbole to try to bash Republicans into passing the stim-pack with no questions asked. He told us we face an economic "catastrophe" if government, the "only" answer, doesn't act NOW!
Only 12 percent of the bloated bill would go to real infrastructure, and the biggest portion of spending wouldn’t occur until 2010 and beyond. Yet we can’t endure a few more weeks of dickering? Gimme a break, Bama.
Thus the Tim Geithner Show had to go on, even if the new Treasury man wasn’t ready to perform because much of his program isn’t yet figured out. So he couldn’t tell Wall Street what it wanted to know.
Above all else: How the feds would quarantine the mortgage-backed derivatives debacle that Wall Street itself created. Geithner had nothing beyond a vague mention of a public-private effort that would start at $500 billion, a fraction of what’s needed.
A mention of suspending the mark-to-market rules would have been great. “Geity” gave 'em bupkis. (M2M requires banks to write down huge charges on junky assets now as if they had to sell everything today, even if they can hold those assets for years and then sell when prices are higher.)
Tax-loss carry-forwards would have been a good theme to hear, too, but we got zilch. A plan for housing foreclosures wasn't ready, either.
One reason all those details weren’t ready is that, as The New York Times reported yesterday, Geithner himself has had to wage an internecine struggle against business-bashers in the Obama White House who were pushing far more punitive measures for Wall Street.
That cuts to the real problem with President Obama, a Washington rookie who still campaigns at Town Hall meetings as if he hadn’t yet been elected. His lack of business experience shows up in painfully stark relief.
Inciting class warfare, he assails a Wall Street bonus system he clearly doesn’t understand. He depicts creators of wealth and lenders to business as feckless financiers who foisted this crisis upon the rest of us. He fails to blame anyone else—not Congress for inflating the Fannie-Freddie bubble, not homeowners for speculating and buying pricey houses beyond their means.
And now, chagrined by the drubbing the stock markets gave his new Treasury secretary on Tuesday, the President says Wall Street is being bratty and demands an “easy way out.”
In his flawlessly calculated campaign for office, Obama showed a secure, centered patience and self-assurance. Now that he is President, the becalmed prophet has turned impatient and petulant. Wall Street—and your retirement accounts and stock portfolios—is all the worse for it.
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