THE LESSON OF IMPATIENT PATIENCE; A GEITHNER BRIGHTENER UPDATE

Treasury Secretary Tim Geithner pointed out that we need to beware of taking steps to fix the economy and then when we see a bit of progress stopping those steps. This can be compared to someone who takes medicine to get cured, and then when he/she feels a bit better they stop taking the medicine. The probable result will be a relapse of the illness. Geithner has agreed with our theory that the key to fixing the economy is “banks a lot” (to get banks lending again), but had correctly pointed out that banks only do about 50% of the lending in this economy and the rest is from secondary market securities and other such entities. So what we need to do is not just stop with bank fixing but continue the healing process by stabilizing every lending entity in the economy until we are a once again healthy stable patient.

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SUMMERS TIME AND THE GIVING AINT EASY

We hear the phrase constantly being used in sports (the quintessential version being) that’s Manny being Manny”. Sometimes this is used as an excuse, a disclaimer, or an explanation. I think that what economic adviser Larry Summer has been trying to say to the country regarding the recession is that when we bail out the banks what we have to ensure is that “banks just be banks”. That means that we should give them a portion of the bailout money, and not give them more until we see that money has been lent. The giving aint easy, but banks still have to be banks.

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NATIONALIZATION, WORD TO YOUR TRAUMA

Chuck Schumer and Lindsay Graham, 2 very different Senators ideologically, have a very similar and we believe pragmatic view on the bank crisis. Namely, that they have to be fixed as one of the key players of the financial system. The term “nationalization” evokes in many people an unpleasant reaction, so they really don’t need a different course of action (as to have the government examine bank by bank) and much as they need a different course of words, such as “receivership”. We think the American people like to play offense, so we propose the term “quarterbackship”. The federal government won’t run the banks, but they will definitely help make the plays that are called. Additionally, they say “one size does not fit all” and we know that one play does not fit all…which is why you need a quarterback. So we predict that sometime down the road someone will use this term, as we see that both “nationalization” and receivership” seem to frighten various parts of American society.

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