There is the old story about the flash banker from New York who drove
his flash girl friend up to Maine in his flash motor car to the newest
hot getaway retreat he had just read about in the New York Times.
Screeching to a stop in front of two old gents sitting on a porch in
the center of a small town, our hero tipped back his Gucci shades,
leaned over his female position and inquired:
"Tell me old timer, do you know the way to Amity Falls?"
The two old gents look at one another and around the town square.
One, slowly, turned to our hero and said, "If I were you, I wouldn't
move a Goddamn inch."
Now that there is hopefully the understanding of what ails us in this
mess, it might be a good idea to try to figure out where we are and
who is along with us in this ride.
A major problem confronting us at this moment and what will be a
continued inhibitor in finding a solution is trying to figure out just
who is in charge, and perhaps the best way to do this is to agree on
who is NOT in charge. Shelia Bair is NOT in charge, has never been in
charge and SHOULD NEVER be in charge. She and her agency have no role
to play...nil, none, niente rien, nyet etc., etc. If the Fifth Ninth
bank of Podunk goes under, by all means turn her loose. The FDIC has
neither the resources (people, money) nor the understanding, and
certainly not the mental capacity to contribute ANYTHING to this
situation other than nonsensical interviews such as that given on PBS
this week by the aforementioned Ms. Bair. The woman is a toxic asset
and should be shuttered. Let us agree without objection
My view, tempered in the crucible of experience with issues such as we
face is that it is never a good idea to allow politicians too close to
stew pot as they will, at some point, surely tip it over. The
politicians are in this piece is of course the Treasury and not
because of Sec. Geithner who I took to task yesterday. Despite have a
goodly long lead time to get organized and what should have been a
clear understanding of what the problems were, this administration has
allowed Sec. Geithner to function essentially without a staff for the
past 50 days. Known as a consensus builder and not as a top down
leader, the Secretary must by finding it damn hard to form a consensus
with no one. He has been put in a truly tough spot. It would appear,
therefore that the point in this exercise must be given to the Fed--
where, IMHO it belonged in the first place--it has the people and the
understanding to accomplish the goals to be set. I have been an
admitted admirer of the Fed for some time but even without my bias we
simply do not have the time to wait for the Cavalry to arrive at
Treasury and get set up. I think we have a small, but very
interesting and exciting window of opportunity to grasp this thing by
the neck if the administration were to move forcefully and without
regard to the politics of the Hill or bit players in this play.
A further thought: the further involvement of the politicians either
through Treasury or directly by the Congress may well have
consequences that are not only undetermined but immensely harmful to
the future of the financial industry and the country as a whole. We
are not dealing with just our financial system: this is a global
order. Before we hop into bed, we had better be sure in what town
Down East is the Inn.
More tomorrow.
Geithner Plan...Buy bad assets from banks, banks love this.....I (investors) put up 15% and the gov't loans me 85% non recourse loan. A plan that if the assets craters the gov't eats cake (takes the loss).
ReplyDeleteBut we are told to 'have no fear' the gov't plans to give us a healthy dose of inflation that should bail out these assets.