Treasury Secretary Geithner's Plan

BBB - since you seem to be the only person alive who holds that opinion on Geithner's plan, would you mind explaining said plan to the rest of us?

Certainly nobody on this thread claims to have the least clue on the alleged "rationality", "well-thought out" logistics, or "comprehensiveness" of the damn thing - and neither did any of the economists and financial actors worldwide whose comments are known to me, at any rate. Thank you in advance.

Anybody can say anything, but there can be no doubt on exact times involved in either securities, commodities, or currencies trading; they're known to any degree of granularity, down to picoseconds. I know this because I write computerized trading models for arbitrage and other trading strategies.

Please stop arguing on the basis of flimsy hearsay BBB, you're wasting your time and everybody else's.

The reporter was on the floor of the stock exchange when he broadcast on CNN the stock crash has started before the speech began.

High Seas, you certainly have my permission not to read my posts if you find them annoying. I wouldn't want to waste your time.

BBB

On the contrary, BBB, I'm reading your posts assiduously - you're the only person on earth who SAYS she understands Geithner's plan. As I already asked (politely) before, please EXPLAIN it to us; it's a mystery to everyone except you:


http://krugman.blogs.nytimes.com/2009/02/10/the-rorschach-plan-wonkish-or-at-least-hard-to-read/

Did you forget you posted this on the previous page?

Geithner's speech was posted many hours before he presented it, I had read it several times before I actually listened to it, I must be the only one.

http://business.smh.com.au/business/world-business/geithner-defends-bad-bank-plan-20090212-84zy.html?page=-1

Geithner defends bad bank planFebruary 12, 2009 - 7:49AM

US Treasury Secretary Timothy Geithner told Congress he needs time to work out the details of his strategy to shore up the financial industry, a day after stock traders punished the initial outline.

``I completely understand the desire for details and commitments,'' Geithner told lawmakers today at the Senate Budget Committee in Washington. ``But we're going to do this carefully, consult carefully, so we don't put ourselves in the position again'' where there are ``quick departures and changes in strategy,'' he said.

In his second day of grilling by lawmakers, Geithner indicated he's trying to rebuild the credibility of the Treasury's financial-rescue program after his predecessor, Henry Paulson, abandoned the approach he committed to with Congress. The Bush administration first sought to buy the toxic securities choking banks' balance sheets, then abandoned the idea in favor of buying stakes in lenders.

The Standard & Poor's 500 Stock Index slumped 4.9% yesterday, the most in three weeks, after Geithner unveiled plans to address toxic assets without an explanation of how they will work.

Program outline

Geithner's program has three main elements: Injecting fresh government capital into some of the country's biggest financial institutions; establishing a public-private partnership to buy as much as $US1 trillion ($1.5 trillion) of banks' bad assets; and starting a credit facility with the Federal Reserve of as much as $US1 trillion to promote lending to consumers and businesses.

Senators today pressed Geithner on how much more money he may seek for the Treasury's $US700 billion bailout fund, renamed yesterday to be called the Financial Stability Plan. The secretary said officials are assessing whether and how much will be needed, as they work out the details of their strategy.

``It's incumbent on you very soon to help us understand if additional funds are going to be needed and in what amount,'' said Senator Kent Conrad of North Dakota, who chairs the budget panel. He warned against any repeat of the ``asterisks'' in administration budget requests that left the costs of the Iraq war unaccounted for in past years.

Cost of plan

``We'll do it as quickly as we can,'' Geithner responded. So far about $US387 billion of $US700 billion fund formerly known at the Troubled Asset Relief Program has been spent, he said. Conrad noted that after accounting for a $US50 billion mortgage plan, that leaves $US263 billion - less than most economists say is needed to stabilize the financial industry.

Conrad estimated the Treasury will need to seek congressional approval for $US300 billion to $US500 billion in additional funds.

Officials yesterday said it may take months to set up the fund that will buy illiquid securities. No private investors have so far committed, they told reporters in Washington. The Fed has also yet to begin the effort to spark new lending by offering credit to investors in securities backed by new credit-card, auto and student loans.

``This is the beginning of the process of consultation,'' Geithner said today.

The risk is that the reaction from investors sabotages the plan before it gets under way, forcing Geithner to change his approach in response - a position that his predecessor, Henry Paulson, frequently found himself in. That may mean the plan ``may just end being an interim step,'' said Kenneth Rogoff, a former chief economist at the International Monetary Fund who's now a professor at Harvard.

`Big disappointment'

``Geithner did a great job in painting the broad strokes of the problem and laying out general principles, but it was a big disappointment not to have more details,'' Rogoff said.

President Barack Obama, speaking at a Feb. 9 press conference, said it was critical that the government restore investor trust in the financial system. ``We've got to restore confidence so that private capital goes back in,'' he said.

The trouble is that investors abhor uncertainty and Geithner only seemed to add to that with a proposal short on specifics.

``He should have waited until he had his ducks in order,'' said Ward McCarthy, of Stone & McCarthy Research in Skillman, New Jersey. ``The lack of detail leaves too much room for confusion, misinterpretation and speculation.''

Executive compensation

Reflecting an outcry against the compensation of Wall Street executives as taxpayer funds flow to the nation's biggest banks, Senator Bernard Sanders of Vermont challenged Geithner on why the government hasn't fired more chief executive officers.

Geithner responded that management changes will be made if it ``makes sense.'' Pressed on whether he would fire Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein, he responded that the decision is up to the bank's board of directors.

Congress today held a separate hearing with the chief executive officers of eight of the largest US banks to investigate the use of the capital received from the government.

``There is a substantial public anger and alleviating that public anger, not with mumbo jumbo but with reality, is essential if we're going to have the support of the country,'' House Financial Services Committee Chairman Barney Frank said at his panel's hearing.

Geithner's plan also includes a $US50 billion allocation to efforts to stem mortgage foreclosures. That strategy has also yet to be worked out. The Treasury chief is scheduled to meet on the matter later today with industry representatives and Housing and Urban Development Secretary Shaun Donovan.

``In the next few weeks, the president and his team will outline a comprehensive program to help address the housing crisis, Geithner said. ``Our focus will begin on using the full resources of the government to help bring down mortgage payments and help reduce mortgage interest rates.''

Bloomberg News

I'm not an a scholar nor an expert on economics. I posted my feelings of relief because compared to the terrible communicator, Hank Paulson, who only projected desperation and a lack of competence. Paulson was a complete failure in the way he communicated. He was more interested in defending himself than solving the problems. He obviously didn't know what to do except for the sector he was familiar with. The banks and the stock market. Even then, he bungled his actions. He did the only thing he knew to do, which probably prevented the disaster from getting worse at that time. But then he blew it when he didn't follow through with what he said he would do. Letting Lehman Brothers fail probably was a mistake because it panicked the other financial corporations and the stock market.

Geithner is articulate and projects he at least knows a process for solving the problems. The hype before his speech was unfortunate in that it inferred and misled the public to expect the final plan was ready to be presented. He's only been treasury secretary for a few days. I was encouraged that he was able to present an outline so rapidly of the process to develop a comprehensive plan.

I have confidence in Geithner where I didn't in Paulson and Bush. I shudder to think what might have happened if McCain and Palin had won the election.

BBB

The text was available, but in most speeches some changes are made during delivery, plus comments are added in response to questions. Geithner took no questions - for good reason!

Throwing lengthy articles / posts out in lieu of explanation (not you Dys, some of the other posters here) is worse than just plain admitting "I don't have a clue", which is what any honest person would do if caught making outlandish claims with no backup. Never mind - just try not to do it again.

I told you to ignore my posts if they annoy you and spare me your arrogant superiority over people who express an opinion with which you disagree.

BBB

Please note, BBB, that I expressed no opinion on your topic - meaning that by no stretch of the imagination could any degree of "superiority" be involved. Or inferiority, for that matter.

There's no need to take offense where a simple review of what was actually said will show no critical comment or disagreement was ever made.

I think your political biases are showing here. Paulson was reacting to events that surprised nearly everyone and which were unfolding before his eyes. Months have now passed and we have the benefit of knowing what was (and wasn't) achieved by the actions taken by the previous administration. Geithner in his previous role at the Fed was intimately involved- right from the start - in the crisis and the actions being planned to contain it. The notion that he just started working on it doesn't wash.

The fact is that most observers and the market generally were disappointed in the lack of specifics of the "plan" Geithner presented. Certainly the stock market's reaction was vivid and unambiguous - people expected or hoped for more. Indeed it wasn't so much a plan as it was a mere recitation of the President's rather vague and lofty political rhetoric on the subject.

I don't preclude the possibility that Geithner will eventually do well: indeed I sincerely hope he does. However to praise his rather vacuous remarks for their supposed rationality and clarity in comparison to what went before merely illustrates your personal prejudgements on the matter, and not any virtue on the part of Geithner.