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Wednesday, February 11, 2009

Secretary Geithner Needs to Go...

Yet, given the nature of politics and the markets, he can't now and won't. We all have a serious problem and this problem is difficult to quantify. Secretary Geithner, as we all know, was found to have fairly significant tax issues. He failed to pay the pay roll tax for multiple years while working at the International Monetary Fund. Despite the serious nature of these misdeeds, Geithner was still confirmed. The administration made Geithner out to be indispensible. In other words, the public was supposed to swallow tax cheat overseeing the IRS because this tax cheat was unique in his ability. Yet, his unveiling of the bank bailout indicates that not only is he not unique, but frankly, he's probably simply not up to the job. Jim Cramer said he isn't ready for prime time. The market tanked right after his presentation. The general consensus was a plan very short on detail. This created an even greater aura of uncertainty and everyone ran for cover. Geithner's problems were of both style and substance. Not only was this the sort of vague plan that two buddies could put together over drinks, but he looked and sounded nervous throughout. (take a look for yourself)

There is an old saying, "you never get a second chance to make a first impression". Geithner has had two chances and he's failed miserably. He will likely be low key for weeks working behind the scenes. In the meantime, the general public will soon caricature him. Between his tax problems and his awful performance, he will become the butt of many jokes. That is not the place to be when he will be the point man on much of the economic recovery.

He simply no longer has the trust of the market, the financial world, or the public at large. Economies are built on a giant maze of many factors and psychology is at the top of that maze. It is nearly as important to present the right front as it is to execute the right policy.

Banks will lend more, consumers spend more, and businesses invest more because they believe that those in charge have a handle on things. Right now, those three elementst believe the point person is a bumbling idiot, tax cheat, that is a deer in headlights when it comes to the task at hand. That is the exact opposite of what we want. Secretary Geithner can of course get the confidence of everyone back, but that is a monumental task. First, he has the confidence of no one now. He can turn this around by finally presenting a detailed plan that lays out how the Treasury will oversee stabilizing credit. Yet, that is weeks away. In the meantime, he will be derided by nearly everyone and will likely make scant public appearances. The plan will need to be flawless. If the final and detailed plan is anything but perfection, the Treasury Secretary will likely lose everyone's confidence forever.

Of course, getting rid of him is not that simple. President Obama simply can't do this anytime soon. If he were to make this announcement today, his stimulus is dead on arrival. Such an admission of incompetence is all the cover his opponents need to block the stimulus. Furthermore, such an announcement would send markets into a tailspin that is nearly impossible to recover from. As such, we are all stuck with him. We all have to pray and hope that he will grow into his role and soon. Our economic nightmare maybe here. We may have selected a Treasury Secretary that isn't up to the job at a moment when it will be the Treasury Secretary most responsible for jolting the economy.


Anonymous said...

What alarmist nonsense.

Getting rid of him. Are you joking.

Must have had nothing to write about to day Mike.

mike volpe said...

That comment sniffs of someone that didn't read my piece. In fact, I said that politics and reality means taht President Obama can't get rid of him.

I explained the complexities of the situation and you made a very simplistic comment. I said that he isn't up to the job. Clearly, his performance so far points that out.

Anonymous said...

He isn't up to the job?

How arrogant and presumptuous you are to declare this so soon.

His knowledge of this situation is about ten-fold yours.

Give him a chance.

[and get a little humility.]

mike volpe said...

First of all, you have no idea what I know about the situation. Second of all, I am not the Treasury Secretary.

Third of all, this is high stakes. His tax disclosures weakened him, and then he totally fumbled the rollout of the bailout. At this point, he has the confidence of no one outside the administration. That is reality. That is not me saying but reality, and as such, he is in a very difficult position. He has shown himself to be totally not ready for prime time, and regaining confidence lost over all segments of our population is not easy.

Anonymous said...

He disappointed with his first conference - that is a fair point.

But to say NO ONE outside the administration has confidence in him is a massive overstatement.
All this has done has raised doubts about him. Thats it.

This is a highly intelligent man with years of good work behind him. The market dropped because they were expecting details they didn't get. The details will be forthcoming. Clearly it shows the mess left to him is far more complicated than the average folk can appreciate.

And yes I think it easy to sit on a blog and criticize without appreciating the complexity of certain situations. I know, from reading previous posts of yours, that you rate your own knowledge.

mike volpe said...

I definitely feel as though you simply haven't read the piece because I am repeating a lot of things I already said within it.

He already was weakened by the tax disclosure. Now, he lays an egg in his first major announcement. No one is saying he isn't intelligent, but at this point, he has the confidence of no one.

I said that he can get the confidence back but that it would be very difficult.

In the meantime, he will be caricatured. No one knows how long it will be before he provides details and frankly, if he was going to be this vague, he should have waited to make the announcement. His plan will have to be flawless because confidence level in him is so low now.

That's why in a perfect world he would be dropped. I am not criticizing but analyzing. I never said I could do the job better. I said he is simply no longer in a position to have the confidence of anyone to do the job himself.

Anonymous said...

Although it seems the Republican strategy isn't working too well either.

A recent Gallup poll found that 67% of Americans approved of the way he was handling the stimulus bill; 31% approved of congressional Republicans' performance and 48% approved of congressional Democrats'.

These numbers look good for Obama at least.