C.M.O. 2.12.2009

Credit Market Overview
February 12 2009

After losing the election for Governor of California by almost 300,000 votes in 1962 Richard Nixon gave an impromptu concession speech the next morning saying to the press, whom he blamed for favoring his opponent Pat Brown, “You won’t have Nixon to kick around anymore.” Given the how things were in his final days as Treasury Secretary it would not be a stretch to think that Hank Paulson had similar sentiments.

Where the problems stopped for HP, however, they seem to be picking right up for poor ‘ol TG. If early indications hold out we might see a little more efficiency from Mr. Geithner as his renaming of TARP now only takes three letters FSR. Unfortunately the latter actually takes more effort to say. Let’s hope the rest of his accomplishments do not appear to be one thing while being something harder and not easier.

It would also appear that Timothy’s plight is creating a lot more frustration than sympathy by both Washingtonians and Wall Streeters. Christopher Dodd (D., Conn) is placing responsibility for the fix on the Treasury and the current administration saying that it is their job to “reassure the American people that their money is in good hands. The public simply has no understanding about how government assistance will help, if at all.”

Not for nothing but that is not how I want one of the guys who has just voted to spend +/-$800BN of my taxpayer money talking. Comments like that seem an early indication that even the Democrats that voted for the biggest stimulus spending bill in history don’t know if it will work. (Maybe he went back and read Treasury Secretary Morgenthau’s notes?)

Wall St. too is unimpressed by the efforts of the new kids in town. Douglas Dachille, CEO of First Principles Capital Management thinks, “The uncertainty the government has created has made it nearly impossible to price many securities.

The plan to have private equity get involved sounds great on CNBC but you have to remember. The P/E guys get their votes by delivering solid returns not pork so to think they’re going to get involved before the rules of the game have been laid out is a little naïve on whose ever part thinks that’s the way it’s going to happen.

One person, while not necessarily in Mr. Geithner’s corner, at least seems to appreciate his predicament is Sen. Robert Bennett (R., Utah) who described Tim’s challenge “as nasty a briar patch as anyone has ever tackled.”

Enjoy the week.

Jim Delaney

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