Wednesday, February 11, 2009

Nice Job, Tim

Yesterday was an amazing day in the markets. The new Secretary of the Treasury, a man so indispensable to the nation that Lord Obama and the Democrat-controlled Senate overlooked his personal tax mess to put him in the job, was to address the nation as our economic savior. Expectations were already high but got even higher when Obama demurred on an economic policy query saying he didn't want to steal Tim's "thunder."

The markets were selling a bit all day as the dismal press conference from the night before showed a new president not quite up to the job, to put it gently. But when Secretary Timmy's remarks hit the screens in trading rooms all over the nation the result was dramatic. Stocks plunged 5%.

That's a loud vote of "no confidence" in the Obama administration from the investor class. But why?
First, the buildup was huge and the offering was puny-- lots more borrowed money-- but not much of an idea what would happen with it all. But there's something more at work I think. People expect bankers to look a certain way. They expect a treasury secretary to look more like Paulson than like a guy who needs to shave but once a week. Confidence is all important in the financial world-- especially when you have a fiat currency and no standard, gold or otherwise. So, a youthful appearance is not an advantage. Is it fair. Of course not. So what? Tim can overcome that with great work, but on first blush it isn't good.

But wait, there's more, he doesn't look you in the eye. This guy is coming to the American people saying he's going to borrow trillions of dollars from our unborn grandchildren and he seems unable to square up his shoulders, look us in the eye, and deliver the message. So it wasn't just what he said, it was the look: fear?, sneakiness?, arrogance?, duplicity? It might not be fair but most of us are aware that visual cues, sometimes almost unnoticeable, play into how we perceive a message. Throw in that the first time most people heard anything about him was his tax problem and I must say that Obama/ Geithner is off to a very bad start.
But all is not lost, Tim. Come out tomorrow and say you're suspending mark-to-market accounting and the 5% lost yesterday will come back in a heartbeat. I won't even send you the bill for that advice Mr. Secretary... because I would never do business with somebody who always looks sideways at me.