The Geithner Resignation Pool
I know we’re only three and a half weeks into the new administration. But I think it’s already time that informed lay people can start guessing how long Tim Geithner will last as Treasury Secretary.
I won’t take a position on this myself. I will instead marshal facts and evidence you can use to make your own guess in the comments section.
Let’s start with a piece in the International Herald Tribune, which surveys a host of establishment economists, all arriving at the same conclusion: Many of the major banks are insolvent, and Geithner’s TARP II plan — even once the details are fleshed out — will be inadequate to the task.
Hmmm… A Geithner brainchild that even by conventional, interventionist standards is a dud. Where’ve we encountered that before? Oh yeah, the decision to let Lehman go under last fall when Geithner was still head of the New York Fed.* Seemed like a good idea at the time, until it unleashed the Counterparty Cascade from Hell — nearly taking down AIG, forcing money-market funds to “break the buck,” and by some accounts bringing the U.S. financial system within three hours of meltdown.
Our next item of evidence is a report that Goldman Sachs called an emergency meeting of its biggest clients — hedge funds, private equity guys — on Tuesday after Geithner floated his TARP II turkey. Goldman first denied the meeting ever took place. Then it tried to spin the meeting as having been scheduled weeks in advance. Whatever the truth, clearly some of the meeting’s participants wanted it known they weren’t happy with the plan and strategically leaked the assertion that it was called at the last minute.
For someone who’s a Goldman guy through and through, Geithner doesn’t seem to be getting much of a vote of confidence here. No, Geithner’s never been on the payroll, but his designated chief of staff was a Goldman lobbyist, one of the board members of the New York Fed that Geithner used to run was a Goldman guy, and he’s a protege of uber-Goldman guy Robert Rubin.
So there’s the evidence, gleaned just from taking in my usual morning news diet. Again, I won’t take a stand on how long Geithner will last, although I strongly doubt he’ll be fired outright, which is why I call this the Geithner Resignation Pool; whenver the time comes we’ll get the usual song-and-dance about wanting to spend more time with family. So fire away with your own guesses about the timing.
* I’ve been misinterpreted on this before, so let me be clear: I’m a free-market guy who thinks all mismanaged banks should get what’s coming to them; better to purge the rot from the system and get it over with. I’m merely pointing out how Geithner blows it even using the yardstick of conventional bankster wisdom.