Obama's Choice of Geithner for Treasury Sends Currencies Up

On a day when the market had nothing to be happy about, the leak of President-elect Barack Obama’s Cabinet announcements have erased one major uncertainty for the financial markets, helping equities and currencies recover. The NY Times reports that Hillary Clinton has accepted the post of Secretary of State and NBC reports that Timothy Geithner will be named Treasury Secretary.

When compared to the vast experience of Lawrence Summers and Paul Volcker, Geithner is definitely the more spirited choice. In order to command the same respect that Summers and Volcker may have instantly received from Wall Street, Geithner will have to hit the ground running at an unusual pace to reassure investors. The benefit of choosing Geithner is that he has been intimately involved with the current financial crisis from Day 1. There will be continuity and no need for any major transitions.

In order for the financial markets to hold onto their gains, Geithner will have to work with Paulson and Bernanke immediately to figure out the best ways of using the second half of the $700B bailout package.

Here is more information on Geithner:

Timothy Geithner has been serving as the President and Chief Executive Officer of the Federal Reserve Bank of New York since 2003. Up until the latest financial crisis, he has been relatively unknown especially when compared to Summers and Volcker. However he has been instrumental in helping Hank Paulson resolve the current financial crisis by first brokering the JPMorgan Chase (JPM) acquisition of Bear Stearns. Since then he has called for overhauling the regulation in the financial industry, been intimately involved in the government’s decision to let Lehman Brothers fail and played a key role in the dispute between Citigroup (C) and Wells Fargo (WFC) over Wachovia (WB).

Geithner is also a protégé of Lawrence Summers and has been involved in the bailouts of Brazil, Mexico, Indonesia, South Korea and Thailand in the 1990s as the Undersecretary of the Treasury. He has less far less enemies than Summers and works well with both Republicans and Democrats. Geithner is credited with warning Wall Street Banks in 2006 and 2007 to figure out what would happen to their portfolios if one their main competitors failed. He was worried about the smoke and mirrors that complex credit derivatives can have on balance sheets. Geithner’s only shortfall is that he has worked too closely with Paulson in resolving the current financial crisis which has both strong supporters and critics.

This is an incredible opportunity for Geithner because the challenge that lies ahead is one that will cement a reputation for decades to come and we wish him good luck!

Comments

[Robert Nabloid:]

See the other post by Kathy here: seekingalpha.com/artic...

Lots of other comments about Geithner on the above link. Excellent read.

2008 Nov 23 08:33 PM

[bearfund:]

1. Like others in power, ignore brewing crisis for 4 years.

2. Toss a few hundred billion of taxpayers' and savers' money down the toilet bowl in an ineffective response to said crisis.

3. Get promoted to SecTreas.

Now why didn't I see that coming?

Geithner is a terrible pick, but that seems to be par for the course in the new administration. Thank you, sameold.gov. Inspiring.

2008 Nov 24 12:34 AM

[Robert Nabloid:]

More currency manipulation. More printing. More Federal Reserve power.

This isn't change for the better. This isn't even change. This is more of the same. Only the faces change. All of them believe in the same ideology - social liberalism - higher taxes, more government control, manipulation, etc, etc, etc. Government must save us from... ourselves? Help us! Fix the economy! Save us! Then, after they have taken our money through taxes and inflation, we end up crawling back to them to help us - and the government will give just enough to the poor to prevent a rebellion.

A 5th generation American likely has little to show for the first 4 generations hard work and very frugal ways - inflation and taxes ate up our fore-bearers' wealth, what little they managed to accumulate.

Want real change? You voted for the wrong men. A choice between Party A and Party B every four years doesn't constitute Democracy - especially when both parties do the same thing (enlarge government, spend more money, etc, etc, etc). I'm just waiting for some more amendments to the constitution. Folks, this is just more of the same. Power is being shifted from the people to the government - this is not new. Give your head a shake.

"Obama's Choice of Geithner for Treasury Sends Currencies Up"
-Yeah, it sent currencies up for a bit. What direction have currencies been going the last ~80 years? A coca cola was $0.05. Now it's $2. Fiat currencies are still headed down due to inflation over the long run because fiat currencies are inherently flawed. Deflation is a short-term issue, not a long-term one, and it's only an issue when you are up to your eyelids in DEBT anyways. Ultimately, inflation will occur in the long-run. Period. No fundamental systemic change has been proposed or enacted, nor will it with a Federal Reserve man in charge (Federal Reserve is a private corporation, not a Federal one...).

The bailout was a joke and this man, Geithner, was involved. Do you know where the bailout money went, dollar for dollar? Nope. You won't ever (unless Bloomberg's lawsuit wins). Yup, we have to sue to see. But even if we find out, we can't investigate or give an repercussions for how that money was dolled out - it was built into the bill to be secretive. We gave carte blanche to a single man to doll out nearly a trillion dollars (some say up to 5 trillion), in any way he pleases without repercussions. Obama and McCain both urged the bill to be passed. Obama is a lawyer and should have read the document and urged a few changes to increase transparency. Geithner was involved in the bailout.

From the most successful and rich country on Earth to the most indebted one in less than 80 years. Think you'll get change? I swear, I think I live in the 58th state Obama spoke about.

"I have now been in 57 states. I think one left to go." - quote from Barack Obama, the same man that helped sue CitiBank to force them to lend more sub-prime loans to a certain community... The same man that has not yet shown his long-form certificate of live birth which would clear up a few issues about his eligibility to legally be President (he'll never show it, but he'll still become President). The same man that got all his thesis papers and previous work to become classified (Does he have something to hide? But you won't be getting any transparency from him - actions speak louder than words.). The same man that said he wasn't a Washington insider and could enact real change and yet put a bunch of Washington insiders and bankers into all the key positions as soon as he got elected. The same man who refuses to reveal his large donors. The same man who told us he didn't realize his pastor was controversial (or racist) though he went there for years. The same man who wouldn't let the media talk to either of his grandparents (especially after his Kenyan grandmother told the media he was born there and not here...). McCain is no better. They are both following the same general path that has very little to do with change or transparency. I've been very critical and harsh, but I think it's needed with the big honeymoon that has occurred.

2008 Nov 24 02:36 AM