Wall Street appears to have given US Treasury Secretary Timothy Geithner’s $1tn toxic assets plan the thumbs-up, with the Dow surging nearly 500 points on Monday. But what do the pundits think?
Reviews are in: Geithner clears the bar. Treasury Secretary Timothy Geithner — who hasn’t had many winning days in his short tenure on Pennsylvania Avenue — scored a big political victory Monday, as Wall Street traders breathed new life into his career with a stock market rally of nearly 500 points. — Eamon Javers, Politico
The stock market rally and the Geithner plan. I’ll put it like this: the fact that Wall Street has reacted well to the Geithner plan today is by no means a sufficient condition for its success. But it is probably a necessary one. If the markets did not believe that the plan had a chance of success, there’s little chance that it would. — Nate Silver, FiveThirtyEight
Will the Geithner plan work? All of us have an interest in the plan succeeding — we need our banks to be healthy and able to lend again to consumers and small businesses; the stock market rallied sharply in the opening hours. But the real test will come over time: will the private investors actually come up and buy enough of the toxic assets? We may have to wait a number of weeks to know for sure. — David Gergen, CNN
Take the steering wheel out of Geithner’s hands. I don’t believe Geithner thinks we’re stupid (although he almost certainly doesn’t think we’re as smart as he is). He just can’t change who he is: a creature of Wall Street, habitually sympathetic to the people at the top of the financial system, who he clearly thinks were born to run the world. Geithner’s actions throughout his career are proof that the toxic thinking that got us into this mess is part of his DNA. — Arianna Huffington, The Huffington Post
Man up, capitalists! The plan raises the disturbing question: Where the hell are the capitalists? Where are all the people who are willing to put their own money, and that of people willing to lend them cash, at risk in pursuit of profit? Why are Wall Street’s tough guys such a bunch of girly men? — Daniel Gross, Slate
Two cheers for Tim Geithner’s bad assets plan. The Treasury is promising to lend only an additional $100 in debt alongside the $100 of equity it will provide and the $100 private sector fund managers will invest to buy the securities. The Treasury might lend another $100 but, even then, the debt-to-equity ratio would only be one-to-one. This is, relatively speaking, quite a conservative approach. — John Gapper, Financial Times
Logical but not sufficient. This is, to a large extent, the logic behind the Public-Private Investment Program that Treasury Secretary Tim Geithner outlined this morning: Private credit markets are so consumed by fear and distrust that they’re underpricing real estate loans and securities –which explains the need for government backing to get the plan off the ground. But private investors are better than government bureaucrats at figuring out if one real estate security is worth more than another — which is why they’re being included in the plan. — Justin Fox, The Curious Capitalist
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