“I WISH YOU COULD HAVE COME UP WITH A BETTER STORY; I FELT DISTINCLY LIKE AN IDIOT REPEATING IT.”

2/11/09

The Dow was down some 380 points today, the NASDAQ down 67, and the S&P down 43. All financial punditry was falling all over each other coming up with explanations, which, as experienced investors know, is a fool’s errand. One day’s movements are always inexplicable, and this one was little different. The reason for today’s drop could have been anything, it could have been nothing. It could have simply been the market’s giving back some of the points it picked up last week. But most of the experts attributed the market’s miserable performance to the testimony of Treasury Secretary Tim Geithner’s speech supposedly outlining the Obama Administration’s financial rescue plan.

To the extent that the punditry is right in attributing the market’s plunge to Mr. Geithner’s speech, it is wrong in its specific diagnosis of the disease that was set loose by the Secretary’s vain and pointless babbling. All punditry pointed to the substance of the speech, or lack thereof. The wise men told us that the “plan,” as outlined by Mr. Geithner, lacked specifics, that it was half-baked, that it amounted to (my words) an amorphous mass of maladroit mush.

Though the pundits were correct in their assessment of Mr. Geithner’s speech, they were wrong about what really troubled the market about it. The problem was not the substance of the speech, but, rather, Mr. Geithner himself. This was the world’s, and the world’s markets’, first real look at Mr. Geithner as Treasury Secretary, and they understandably did not like what they saw. He looked tentative and confused. This might very well be because of the disjointed and vague nature of the “plan” he was trying to present, but one suspects he might look that way even delivering the Gettysburg address (provided someone wrote such an eloquent tome for him). Mr. Geithner gave the impression of being a very small boy with a very new and large toy, the directions for which he had prematurely discarded. And that toy was our economy.

Our problems are big and most likely unsolvable by government. In fact, such attempts are bound to exacerbate them. Having Mr. Geithner in charge of the Treasury, the world is coming to realize, increases the chances of the latter.