Vote of No Confidence
Wednesday, February 11, 2009; 9:37 AM
I'm not an economist, but when Tim Geithner unveils his long-awaited bailout plan and the Dow plunges nearly 400 points, that's probably not a good sign.
Most people have been scratching their heads about the Bush bailout. How could we have spent half the $700 billion and yet the banks still aren't lending? They're sitting on the cash or buying other banks and paying bonuses? Where did the money go?
Against that backdrop, the last thing the Obama administration needed was complaints that its plan didn't provide enough details. But that was the overwhelming reaction. "Critical details of the plan remained unanswered, despite the weeks of planning leading up to Tuesday's announcement," the Wall Street Journal said in a midday report.
As if to underline the point:
"Bailout Plan: $2.5 Trillion and a Strong U.S. Hand" -- NYT
"In $1.5 Trillion Plan, Few Details" -- WP
Brian Williams told Geithner in a CNBC interview that taxpayers would like to know whether he's going to need more money from us. Geithner sidestepped the question, saying it would be cheaper over the long run to be "more forceful up front," but didn't explain what that meant. (Williams also asked about his payment of back taxes, and the Treasury secretary used the Obama script: "I screwed up.")
The president told ABC's Terry Moran that Wall Street wants a magic bullet, a painless solution. That may be right, and it ain't gonna happen. Too many financial institutions made too many bad decisions and are in too deep a hole. You can't print enough dollars to make up all the losses.
Obama got one bit of good news when the Senate -- thanks to Susan Collins, Olympia Snowe and Arlen Specter -- passed the stimulus bill. But as old Washington hands know, the real battle always takes place in conference with the House. And who knows how long that will drag on?
Obama bluntly told a Florida town hall yesterday that if his plan doesn't work, "then you'll have a new president." But that could mean four very painful years for the country.
"Investors had been expecting the Obama administration to unveil a shock-and-awe solution Tuesday for the nation's hobbled banking system," the NYT reports. "But the main reaction was disappointment as the new plan raised more questions than it answered, sending stock markets -- and the shares of banks assumed to be holding swaths of toxic assets -- sharply lower."