You Cannot Be Serious!

Today's performance testifying before Congress by Tim Geithner was flat-out the worst job I've ever seen done by any major public official. Geithner single-handedly destroyed about a half trillion of wealth as he showed up like the kid whose dog ate his homework with absolutely nothing of substance. I have never seen a more complete repudiation of anyone by the markets.

I'm just a stockbroker in Buffalo, but even I knew you don't get up in front of these people without a plan. Geithner brought some concepts.

This is a crisis of our own making. We have a banking system based on rules. Those rules are intended to prevent our ever arriving at a place like this. They didn't work. We have a rule that says that a bank's capital must exceed its liabilities or it must be closed. We also have a rule that a bank's capital assets must be marked, or valued, at a market price in order to calculate that capital.

Right now, market prices are pretty low, even on many assets that should eventually pay off. These artificially low prices are depressing capital ratios, which in turn force asset sales, further depressing market values. See how that works? Suspend the rules! They didn't work in the first place. Doesn't cost a cent. Problem solved. The government can make it clear that they will supervise, and stand behind the problem banks until they work their way through. They can issue certificates of forbearance which need to be repaid by the banks. With capital, and time, the too-big-to-fail banks can work their way through the losses and come out on the other end profitable.

Instead we get this preposterous public/private partnership nonsense. Who's going to go there? A few hedge funds? Does this clown have any idea of the magnitude of the problem?

Perhaps we could have seen this coming. As chairman of the New York Fed over the last eight years, Geithner is arguably the public official most clearly culpable for failing to prevent the financial catastrophe in the first place. He was part and parcel of the ad hoc, inconsistent, non-transparent TARP set up by the previous administration. And he's a tax cheat.

In a spectacular manifestation of the Peter Principle gone wild, this putz has risen to the second-most important financial post in the universe on the basis of what? An inability to complete a tax return?

If this is the best we've got, America is in deep, deep trouble.

This administration is utterly out of its depth.