There's No Action Like Inaction

Outside of pledging to have a transparent plan for the U.S. financial system, laying some principles for that plan, implying that he's carrying a big financial bazooka, and announcing a new website that will carry information about the plan when there is a plan,  Treasury Sec'y Geithner failed yesterday to live up to the hype about his talk.  He also failed to prove his boss correct, who in his news conference the night before said there would be a Q&A after the talk.  

All equities tumbled as he talked, eerily reminiscent of the phenomenon during the implosion last year that when President Bush talked, stocks tanked.  Only the safe havens of gold and Treasury bonds were bought in yesterday's sharp sell-off.    

On the substance, Mr. Geithner promised to "stress test" large financial institutions.  Pardon me, but as head of the NY Fed, did he and his boss Ben Bernanke not have the responsibility to evaluate the soundness of the money center banks, in conjunction with the FDIC?

Financial stocks tumbled yesterday.  Probably they had gotten overpriced on hopes.  This down-move may be telling, however, because of the reluctance (still!) of the Obama Administration to wipe out common stockholders of financial companies that would be bankrupt were it not for Government cash and extraordinary guarantees.  This could have been viewed positively by the traders, but it wasn't.  The feeling here is the conventional one in the blogosphere:  Citigroup and Bank of America are zombies.

The mainstream media and blogosphere are both full of commentary about the Obama-Geithner "plan", so there's no need here to spend more time on it.

To paraphrase Irving Berlin:

There's no action like inaction, like no action I know . . .

Let's just say that Timothy Geithner did not steal the show.

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