Wednesday, February 25, 2009

One Simple, Bold, Realistic Move

I've been thinking about what I would do to address this crisis if I were President Obama. Abdicate and hit the speaker's circuit for a huge stress-free payday is the obvious choice. I have plenty of suggestions as to what should be done, but I am a realist. My ideas as to what should be done don't have a serious chance of being implemented until we default on our debt, suffer a collapse of our currency, suffer from hyperinflation, and/or lose a war against Switzerland.

Until then, I do have one idea for Obama which could actually be implemented and have an immediate positive impact. I would "ask" Treasury Secretary Geithner to resign for "personal reasons," and I would immediately appoint Paul Volcker as the new Treasury Secretary. Volcker has presently been relegated to the role of heading the President's Economic Recovery Advisory Board. That means that it's his job to bring the donuts in the morning.

I don't know of anyone in the financial world right now who has more credibility than Volcker. He's the only U.S. official in the past 20 years who has been able to conclusively prove himself a vertebrate. Volcker was appointed Chairman of the Federal Reserve in 1979 and proceeded to take the politically dangerous path of jacking up interest rates to pull our country out of the stagflation of the 1970s. That's exactly the type of leadership and experience we need right now.

Let's not kid ourselves. We face many real problems which will take some time to unwind no matter what the government does. At the margin, however, credibility and confidence do play a role. So far, the government's mixed messages, flip-flopping, half measures, speeches devoted to future speeches about plan details, and lack of transparency have led to increased uncertainty and volatility. Appointing Volcker along with a firm statement that Volcker had carte blanche to clean up the banks would be a tremendous step forward. I would be buying equities on the day of that announcement.

In the meantime, I plan to await the administration's plan to start planning on a plan to plan for the planning of a speech to lay out their plans for this crisis.

The Market Rubbernecker is affiliated with Aspera Financial, LLC, a registered investment advisor. Please read the disclaimer on the home page of the Market Rubbernecker site.