Tim Geithner, welcome to the spot light - as if you hadn’t already been aware.

Geithner’s criticism on Wednesday has been vast, especially in the financial press. The basis of the scrutiny mostly stems from the market’s reaction to his speech. A 388 point drop in the DJIA screamed that his half-baked comments, most of which had already been leaked to the public, were not good enough. However, I am not sure he deserves the beating he has received.

The United States is at a critical juncture. The decisions that have been made to quell 2008's financial crisis, and those that are yet to come, will shape the way our country functions for generations. The breadth of the fallout from our decisions also coincides with actions taken by other countries, most especially, those deemed "emerging".

Demographic and economic trends have been indicating a shift in economic power from West to East. As India and China's economies grow and become more internally sustainable, market share spreads between developed and developing will continue to wane. While the decoupling theory has somewhat been disproven and the economy of the United States still drives global growth, it is uncertain how and when emerging economies will rebound from the present troubles, continuing their grab of the global market.

As of January 14, 2009, the Federal Reserve’s balance sheet totaled $2.1 trillion dollars. It actually decreased in the past week, but not by much - especially when you consider that it has grown $1.2 trillion since January 16, 2008. To me, this increase does not receive enough public attention. If you look at the Federal Reserve’s balance sheet, hundreds of billions of dollars have gone to aid the money markets, foreign central banks, the Treasury, discount window loans, swaps, and repurchase agreements to name a few. A lot of this money went to the banks and other financial institutions.

People like to object about these “bailouts” for multiple reasons. Some, because it goes against the thinking of the free market. Others, because those that made selfish and destructive decisions are first in line to get money as opposed to the people struggling to weather the storm. It stings, but we have to understand why these actions were necessary.

Celent's report that came out yesterday is missing some pieces. To me it seemed more like another chance to point fingers at those in charge than objectively consider the whole picture. I am not saying their analysis is wrong, because they are certainly right in their statistical research, I am saying their analysis is incomplete. While numbers don't lie, they don't always tell the whole truth - just look at GDP statistics. Below is an excerpt from their report:

Overall lending by US banks is at a record high and has increased during the credit crisis.

I must begin this post by saying I am posing this more as a form of questioning than a statement of certainty. I genuinely hope that the incredible turn of events today were a magnanimous shift in investor sentiment and going forward we will finally see buyers return to the market.

Take a look at the DOW chart:

The media circus that has embedded itself in our country has made it impossible to avoid the headlines detailing the difficulties our economy faces. There are plenty of people to blame and plenty of different issues - Bush, Wall St., Congress, Homeowners, Lenders, Oil Pundits, education etc. etc.

As we get closer to this year’s election, these short term issues become increasingly incendiary and are sparking immense debate. Like clockwork, members of opposing parties continuously try to poke holes through their competitor’s platform.

A child’s mind is simple. When being presented with a game that requires a hammer to pound objects into specific slots, children often turn to force rather than intelligence. They will use all their might to try and hit an object into an unreceptive position, ultimately realizing either another tactic must be used or moving on to their next immediate interest.

In the last couple of months, I feel like many Americans have tried to smash oil pricing theories into holes with which they do not fit. Too many articles, blogs, op-eds, etc. have been narrowly focused, placing blame on one of many popular subjects. Expectations of a quick fix have also drenched the connotation of many authors’ rhetoric. If we have learned anything from the contagion induced by this past year's credit crisis, it is that several catalysts can add up to cause a problem bigger than each contributing piece. Additionally, several solutions will be necessary to clean up the mess.