My dad said a fool with a plan can beat a genius with no plan.
— Boone Pickens
Given the criticism the Geithner plan is getting from many quarters (see here and here, for example) it might seem surprising how much higher the market is moving today. We’re seeing moonshots upward in every major market on the announcement of Treasury’s public-private partnership scheme.
Should we be surprised? Not really. The markets have been desperate for a sign that someone somewhere is in charge and doing something. Any semi-coherent plan showing that the Administration and Treasury are trying to get in front of things, and have committed capital, is, to that way of thinking, better than the current rear-guard action.
While the current plan isn’t optimal — far from it, as a matter of fact: why would banks participate if they’re not compelled? — it is, in this view, better than no plan at all. Pace Boone Pickens, that is what really matters to the markets here, at least initially. Once that euphoria wears off, however, we will quickly see over the next few weeks how the “fool with a plan” thing goes.
[Update] Someone please tell Larry Summers to stop staring at his Bloomberg terminal — unless he is going to say that markets hate him when they don’t go up on a future announcement.