Thoughts on the new Treasury Secretary from a Democrat
Yesterday on CNBC, Jim Cramer said he was going to be “magnanimous” and give the new Treasury Secretary and former New York Fed president Tim Geithner, the “benefit of the doubt,” or words to that effect. However, two weeks ago Cramer called him a “total fool”, and appeared to have evidence to back up that provocative claim:
If Tim Geithner, the New York Fed chairman, gets a top spot in the Barack Obama’s cabinet, we are done, finished, kaput. It is that simple. Geithner is the man who this week appointed Michael Alix — the former chief risk officer of Bear Stearns — to a top bank regulation job. If I were a U.S. attorney I would be subpoenaing Alix to see if I could build a case against higher-ups — or him for that matter. But no, Geithner appoints him to a high-level job. It is so clear that Bear’s was the most reckless, the least regulated, the most clueless about risk, and Alix was in charge of that issue — I can only say this travesty is Exhibit A in the brief against Geithner.
Second, my sources indicate that Geithner made the fateful decision — the one that spawned so much of the trillions of dollars in losses — the decision to let Lehman Brothers die. Geithner had within his possession compelling evidence of what could go wrong if he closed it. He ignored it. He made the most wrong decision of wrong decisions we have seen in this era. He is a total fool….”the New York Fed was responsible for regulating the banks gone wild. Geithner was in charge of that regulation. He should be facing a Senate investigation for his action, not a Senate confirmation panel. “
We note that the Dow advanced to close up 494 points after the Geithner appointment was announced an hour before the close. Whether the rally was due specifically to the Geithner appointment or that President elect Obama appears to be choosing known quantities for key positions (eg, Summers, Clinton) can not be determined at this time.
November 23rd, 2008 at 12:39 am
This appointment was the call of the “Shadow Party” within the Democratic party. Obama’s only job is to “sell the sizzle”. You cannot expect any meaningful leadership from a lightweight who has never been tested, showed leadership, or “grilled” by the MSM.
The moment Obama deviates from the script prepared for him, he may well find the hounds unleashed on him similar to how they are constantly attacking Sarah Palin. I suspect the MSM hounding of Sarah nips her political weight and shows Obama what would be in store for his “legacy” should he show any sort of a “maverick” streak. That is a good “two-for”.
The old boys are in charge. Live long and prosper… or not.
November 23rd, 2008 at 3:04 am
The NY Fed’s announcement of the Alix appointment is here:
Alix probably knows as much as anyone about the mess that the markets are in. Hiring him as a civil servant is probably cheaper than paying him as a consultant. He is not being given supervisory responsibilities.
As for Geithner’s role in letting Lehman die, I suspect that, just as Cramer is not as important as he acts, his sources are not as knowledgeable as he implies they are.
Jack, I clicked on your links; alas, Excitable Jim is locked behind a registration page for a “free trial”. He’s probably busy, but not in the way he’d like.
November 23rd, 2008 at 12:35 pm
Um, has anyone looked into this whole phenom as a mass popular delusion?
Are the arguments as to who did what more about trying, unconsciously, to rationalize the irrational?
I’m with the Austrians. I don’t think anyone can know, nor can any number of people be assembled such that they can know the market.
Which is a bit unsettling in that we live in a age where economic planning, especially at the nation state level, is well accepted.
Kind of like, yes the Soviet Union very heavy planned economy didn’t work , but our slightly less but still great planned economy will work. Until it doesn’t and then the witch hunts begin.
November 24th, 2008 at 12:11 am
Academically, one may not be responsible for their decisions. When contemplating relative versus absolute merits of positions and decisions, one can analyze the process used to arrive at a decision. If one is comfortable about the process used to arrive at a decision, one can grasp the relative merits of placing trust in the process rather than trust in the product. “You see this a lot in software developement.”
Tim Geithner did not “stand out” when needed. He either let events overtake him or he did not know the magnitude of the product of his decisions. There should be better people available. Did those more qualified simply pass on the opportunity?
As for Alix being valued as an employee versus a consultant… Give your head a shake. Do not pass “Go”. Do not collect “$200″.
November 23rd, 2008 at 11:08 pm
From TheStreet: Disable any 3rd party Privacy or Ad-blocking software you may have installed.
How about they go screw themselves?
November 24th, 2008 at 8:26 pm
Here is an assessment of Geithner by someone who worked with him.
Paul from Florida, I basically agree with you, but I’d soften your statements a bit. IMO rationality, planning, forecasting, etc are useful and legitimate, but their proper domain is much smaller than we strongly want to believe. Irrationally literal exploitation of rationality has produced unmanageable unstable complexity.
Speaking of things people want to believe, I want to believe that human progress can be compatible with the lore of the Copybook Gods.