Les Jones

Geithner’s Paulson-style reversal of plans

Wednesday, February 18th, 2009 | Economics | Permalink | No Comments |

Just as Treasury Secretary Paulson didn’t know what he was doing under Bush, his replacement Timothy Geithner is making it up from day to day under Obama:

Just days before Treasury Secretary Timothy F. Geithner was scheduled to lay out his much-anticipated plan to deal with the toxic assets imperiling the financial system, he and his team made a sudden about-face.

According to several sources involved in the deliberations, Geithner had come to the conclusion that the strategies he and his team had spent weeks working on were too expensive, too complex and too risky for taxpayers.

They needed an alternative and found it in a previously considered initiative to pair private investments and public loans to try to buy the risky assets and take them off the books of banks. There was one problem: They didn’t have enough time to work out many details or consult with others before the plan was supposed to be unveiled.

The sharp course change was one of the key reasons why Geithner’s plan — his first major policy initiative as Treasury secretary — landed with such a thud last Tuesday. Lawmakers, investors and analysts expressed dismay over the lack of specifics. Markets tanked, and fresh doubts arose about the hand now steering the country’s financial policy.

Our leaders have no idea what they’re doing. There’s no great and powerful Oz who has all the answers. There’s only a pitiful man behind the curtain.

We’re hoping for a few great men, but what we get instead is a committee of gray men in a smoke-filled room. Instead of trusting our faith to them we should take the advice of Adam Smith and Friedrich Hayek and let the multitudes of the marketplace make their own decisions. Get the government out of the way and the economy will eventually work itself out via the invisible hand. Government fiat can’t keep water from falling to its level.

Tags: bailout, Geithner, paulson