We Got the Geithner Objectives but Where's the Plan?

Treasury Secretary Geithner finally had his moment in the sun today to explain the long awaited plan to fix the financial system and end the credit crisis. How did he do? Not very well as the S&P dropped 4.9% while the DOW skidded 4.6%. Mr Geithner articulated his objectives clearly but when trumpeting his plan he lacked details.

Investors have lost faith in the government and were anxiously waiting to here what the new regime had to say. Perhaps all government officials should find a speech coach. John Q Public is ready for fresh ideas and specific details on improving the economy and ending the financial crisis. It would have been better to delay the new plan than to build up expectations for new solutions and let everyone down with scarce details.

We happen to like many of the ideas the Obama crew has announced but most investors are too skittish to trust the government again. The credit crisis and the weakened financial system is not easy to fix. It is easy to knock Secretary Paulson but our country could have easily fallen into a depression with a failed banking system. He was fighting fires for nine months and probably made mistakes but every day had a new crisis and quick decisions were warranted. He ended up with some good decisions and some bad but most investors have concluded he did a horrible job. It is easy to be a Monday night quarterback when the gun isn't pointed at your head 24 hours a day.

Secretary Geithner had many months to learn from some of Paulson's mistakes and today he really got an education on the job. This country wants answers and it wants them now. He needs to take charge and set expectations accordingly. It is easy to under promise and over sell. Unfortunately today he did the opposite. He will get it right in time as the objectives to shore up the banking system, support consumer and business lending, and partner with the private sector to buy up toxic assets are on target. These broad ideas if crafted intelligently will improve the banking system, stem the housing decline, instill consumer confidence, and stimulate corporate spending. The result will be a bottoming of the economy and an improved stock market.

The objectives will take time and the economy won't turn around until 2010 but perhaps we have some basis for optimism.