Is it me, or did Treasury Secretary Tim Geithner make matters worse with his announcement about the TARP today.
Given how long people have been waiting for a “solution” from government, statements like:
We are exploring a range of different structures for this program, and will seek input from market participants and the public as we design it
Seem a bit soft. Surely the market thought that the US government had already done this!
In fact, the market did think this – which is why the DOW collapsed. You increase uncertainty, you reduce the value of capital – it’s as simple as that:
Source (The Austrian Economists)