by Frank James
It's never a good idea to read too much into Wall Street's reaction to news out of Washington. But it's worth noting that Treasury Secretary Tim Geithner's announcement of the Obama Administration's plan to get credit flowing again wasn't exactly greeted with a rally.
The Dow Jones Industrial Average dropped around 300 points, or more than 3.5 percent before the slide stopped. Bank stocks took the biggest hit, suggesting that investors didn't see salvation in what Geithner's strategy.
There's a priceless quote in an Associated Press story that no doubt captures the sentiment of many on Wall Street and beyond.
"The good news is they are going to spend a trillion dollars, the bad news is they don't know how," said James Cox, managing partner at Harris Financial Group.
It was clear from Geithner's presentation in the Cash Room at the Treasury Department that there are as many questions as answers about how exactly the new effort is going to work. That was apparent by the fact that Geithner took no questions following his speech and practically darted off the stage.
Here's the top of the Associated Press reports:
NEW YORK (AP) -- Investors are turning skeptical about the government's latest bank bailout plan.
The Dow Jones industrial average fell 280 points Tuesday as financial stocks led the market lower, reflecting Wall Street's growing concerns about the government's ability to restore the health of the banking industry.
Treasury Secretary Timothy Geithner announced a plan that the government says could mobilize well over $1 trillion in public and private support to get the frozen credit markets functioning again. It includes a government-private sector partnership to help remove banks' soured assets from their books.
The new plan would also expand an effort to unclog credit markets that provide loans to consumers and businesses; funding for this effort would increase to $100 billion from $20 billion. The administration also announced that the program would be expanded beyond consumer and small business loans to provide aid to the troubled commercial real estate sector.
"The good news is they are going to spend a trillion dollars, the bad news is they don't know how," said James Cox, managing partner at Harris Financial Group.
"They built this up as being a panacea," he said. "There was so much hope pinned on them to do a good job. The expectations have been so high. It's hard to live up to."
Comments
Way to play to the pathetic......stock market was already down (quickly) 135 before he even started to talk. But Rush and Vannity would love your effort.
Posted by: bill r. | February 10, 2009 12:57 PM
Let me also add that the markets bottom seemed to be around 7500 last couple of months. When it opened at the current 8200, it certainly leaves room for the market to return to the percieved bottom.
Posted by: bill r. | February 10, 2009 12:59 PM
The administration, in less than 24 hours, has proposed spending 3 trillion bucks. Of course the stock market is going down. It will stay there, too.
This plan is sheer lunacy.
Posted by: Beth | February 10, 2009 1:32 PM
Beth....keep you day job. I for one could not care less what the market thinks. The market, as a whole, is like a bunch of scared sheep that react to things that go bump in the night.
Posted by: Xcellentform | February 10, 2009 1:52 PM
* * * * *
Posted by: bill r. | February 10, 2009 12:59 PM
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Where is it written that the stock market has a logical bottom? In this insane day and age, I defy you to tell me how it will bottom out at 7500. Xcellentform is right. The stock market is acting like it is made up of a bunch of scared sheep. Come to think of it, so is Congress. Scared people don’t know where to stop.
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Oh, and BTW - the Dow fell another 246 points after Geithner’s little spiel. Yep, yep, yep - they really liked it.
Posted by: John W. | February 10, 2009 4:10 PM
If the answer is more jobs to end the recession then why not end free trade now, the American worker wouldn't have to compete with lowest slave wages on the planet, politicians say we can't go back on our deals, but these deals where bad deals made by greedy men at the behest of foreign & corporate lobbyist and have done a disservice to the American worker and in my opinion caused this recession.
Posted by: Sailingwindward | February 10, 2009 6:09 PM
The financiers on Wall Street want to be bailed out with no work on their own part to clean up their balance sheets, while keeping their bonuses. If they didn't love the plan, that's fine with me.
Posted by: Flo | February 10, 2009 6:28 PM