Obama Press Conference
In President Obama's first prime-time press conference, the challenges were many and the answers were long.
We suppose that coaches would have suggested more pithy lines, and brevity in response. Instead, the President chose to speak to the issues in extended extemporaneous answers. This provides great insight into his actual thinking. We'll see tomorrow how many appreciated the significance.
The best Obama position was demonstrated in his understanding that neither the stimulus plan nor the Geithner TARP plan will be perfect. As an astute politician, he understands that any plan that can actually win passage is the result of a political compromise.
Those pontificating pundits who get ratings, viewers, web site hits, or the equivalent are enjoying a feast of opportunity. It is an easy cheap shot to find something in the stimulus package that one does not like.
This sort of analysis is not really helpful to our fellow citizens, and certainly not for investors.
We expect massive criticism of any plan. It does not matter what the plan actually is.
In sharp contrast, we expect both TARP and the new stimulus bill to pass and to be effective. Since the highly-politicized punditry and media will criticize both, there will be a buying opportunity.
This is the opportunity for investors to vote against an ill-informed market and punditry.
Anything in the Geithner Plan that relieves mark-to-market accounting will create a massive rally. We do not really expect this, based upon the leaks today.
We expect a second best alternative, cordoning off illiquid assets. Whether this will work depends upon how it will be "scored" against the regulatory capital of current lenders.
Everyone will be watching this carefully.