A consistency of sorts is beginning to emerge in the Obama economic policy. After much speculation and constant leaks to the press, the much-ballyhooed bank rescue plan was announced by Treasury Secretary Tim Geithner. The plan was essentially a rerun of many of the ideas of the Paulson era. Nothing new. The stock market applauded Geithner with one of the worst sell offs in history as the market shed nearly five percent of its value after hearing the "details" of Geithner's rescue plan. The financial sector, the sector that the rescue plan was designed to save, dropped by over 12 percent on the day.
The most interesting thing about the plan was the insistence by Obama and Geithner to include absolutely no Wall Street input into the plan. This was essential, as the Obama folks now view anyone connected with Wall Street as morally unclean. Therefore, the essential prerequisties for working on this new plan was that you have no prior knowledge or experience regarding financial markets. The outline presented by Geithner was just what you might expect from a plan crafted under this mandate.
We now have a stimulus package with no stimulus elements and a financial rescue plan designed by folks with no experience with financial markets. The Obama Administration is convinced that successful businessmen and folks who succeeded on Wall Street are little more than common criminals. The right way to fashion a reform is to gather together people who have never dirtied their hands in private business and the financial markets and let them design our program for recovery reform.
One virtue of Geithner's announcement and the Senate approval of the stimulus plan today was that panic was restored to the stock and bond markets and treasury security prices rose and their yields collapsed. I guess the Obama strategy is to scare the hell out of everyone and keep people buying treasuries and avoiding all other securities. This should keep financing rates low on our burgeoning national debt -- at least for the next few weeks. Then I guess they (the Obama crowd) will try something else that sounds good to people who have no knowledge of financial markets. Sounds like a plan.
