If one follows the up beat reaction of Wall Street yesterday, one could say that Tim Geithner performed better than the last time he read from a teleprompter about the plans to correct the problems with the US banks. Of course the first time he did not explain at all how the administration and the Treasury Department were planning to do it and this time, after calls for his removal, he finally told us his plans. In a nutshell, the idea is to get the toxic loans and securities off bank balance sheets so that banks can have money and return to lend to credit worthy customers.
I am not going to go on repeating how they plan to do it. First because most of you have probably read or heard about it and, to be honest, also because I am not sure I follow their logic, or maybe I don’t understand it. And that is what bothers me quite a bit. I am not an economist or know a lot about the economy but I believe I am not alone in that. Like many Americans it would be nice if things were explained in a way the average citizen could follow. After all if the government is going to have to loan money to possible investors, this money belongs to the taxpayers, people like myself who would like more clarity. Is it too much to ask?
Also, the more articles I read the more I worry about the Geithner/Obama plan. When an economist Nobel Prize winner like Paul Krugman writes that the latest U.S. Treasury bailout program is nearly certain to fail, and an editorial in the Financial Times says “Its plan may just work. If it does not, much more than the US banking system is at risk” well, it certainly does not reassure many of us.
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