I have no idea why someone so closely associated with the Fed's irresponsible lending is considered qualified to run the Treasury Department:
Wall Street is ending a volatile week with an unexpected jolt of confidence following reports that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary. The major indexes have jumped more than 5 percent, with the Dow Jones industrials surging nearly 500 points.
First of all, I'm glad I didn't sell any last-minute uncovered calls on SPY. I was certainly tempted given the bear markets of recent days. Secondly, this reported nomination (not official as of my blog post's publication) is a clear signal that the new administration's approach to the financial crisis will bring more of the same rather than change.
What can we expect for starters? Other Fed bank presidents weigh in:
The U.S. economy's weakness will stretch well into next year, a Federal Reserve official warned Friday.
I'll spare you the details, but the point is that Fed officials are mostly masters of stating the obvious. So am I, which means I'm qualified to run the Fed. The difference with me as a Fed governor is that I won't blow the bank's balance sheet into oblivion with multi-acronymic inflationary lending facilities.
Fed officials didn't see this train wreck coming in advance, so it's hard to say whether they'll be more successful at mitigating it. Who can we blame if the Fed guys headed to Treasury can't fix this? Is someone to blame?
In the aftermath of the corporate scandals earlier this decade, investor confidence was (partially) restored by a parade of "perp walks" of fallen chieftains like Ken Lay, Bernie Ebbers, and Dennis Kozlowski.
People being what they are, somebody will end up getting scapegoated. It certainly won't be me.
