Monday, March 23, 2009

Geithner Pumps, Market Jumps

The 'Treas' speaks, and the market leaps....

It's as if he spoke a new language today.......finally!

Tim Geithner and President Obama got a Mulligan today when the Market jumped 497 points on Secretary Geithner's plan to facilitate the movement of the bank's legacy assets off their books.  Now, we don't know if the jump was due to some kind of 'mojo' Geithner was using when he announced the plan, or if the market saw his plan as really good stuff.  I guess that only time will tell.
I'm still amazed that the plan did not include any change to the 'Mark-To-Market' FASB rules.  It would seem that if the banks would be able to value their legacy assets at cost for their capital reserve requirements, that it would allow them to reduce their need for government capital, and allow them the time to realize the true value of those assets as the market recovered.
It will also have to be seen if Congress has so poisoned the atmosphere with it's anti-business, anti-capitalism populism rhetoric; threats to summarily cancel contracts; create ex post facto legislation and bills of attainder to single out individuals to punish with tax legislation, that the private sector will be too leery to join in the dance macabre that Obama want them to join him in.

So far, there's been no indication that the public and private sectors can agree on co-investment terms, let alone agree on the value of the legacy assets under question.

Any of these issues would be difficult to hammer out in normal environments.  With the rabble roused and the bonfires lit over 'Wall Street's" supposed malfeasance, the Democrats will have one hell of a job to get this deal done, let alone done well.

We wish Secretary Geithner success in rolling out his plan.  We all need something to work.


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