There won't be a lot of you that will remember the old Lassie TV series. Lassie was a gorgeous Collie that was Timmy's constant companion. Trouble would befall Timmy in the first half of the show and Lassie would spend the second half saving him. Well, Timmy Geithner is on his own and there ain't no rescue coming.
But I'm not sure he needs one.
There evidently was a clash of the Titans in the White House with Geithner and Larry Summers on the one side favoring a move forward to rehab the financial system against Rahm Emanuel and David Axelrod who wanted to punish the bankers first. Added to the cat fight was the all out effort to get the stimulus through Congress and the timing for yesterdays speech couldn't have been worse.
But the program was outlined and there are possibilities. I like the expansion of the TALF to $1 trillion and I don't think that requires any Congressional approval so let's get it going. The public/private partnership to buy toxic assets needs a trade soon and I hope that before too long a press conference will be held with Geithner flanked by Wilbur Ross or Kravis or somebody. The news cycle and Geithner's image is at a bottom so the next move should be positive.
I didn't see anything about easing the insane mark-to-market accounting rules but last night Senator Dodd apparently hinted at that. The stress test that so rattled the markets yesterday shouldn't be that big an issue in that the feds have a secret formula now for assessing a banks health (it really is secret.) Action is needed but I think that is obvious and we need to all take a deep breath and understand there is no quick or easy fix.
The credit markets in the meanwhile have been slowly improving. The TED spread is well below 100 and yields are down enough that corporate issuers are lined up with offerings. Cisco sold 10 year bonds at 200 basis points over Treasuries and it took 400 basis points more for Hewlett Packard to place an issue just a few months ago. The stock market is still above its November lows and it has been my hope/belief that the November low will prove to be a bottom.
Bottoms take a year to complete usually and we aren't yet halfway through that.
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