US Financial Stability Plan Could Spur Year-end Recovery
Despite the initial negative market reaction, US Treasury Secretary Timothy Geithner’s Financial Stability Plan should ultimately boost confidence and may produce a small economic recovery later this year, in Oxford Analytica’s view.
“Despite Wall Street’s adverse reaction yesterday, Treasury Secretary Timothy Geithner’s financial sector rescue scheme is generally friendlier to the banks than competing proposals favoured by many other members of President Barack Obama’s administration, due to Geithner’s dominant role in drafting the plan. While there will certainly be a need for further government intervention, the plan could go some way towards alleviating the most serious remaining systemic risks”
While the market’s first reaction was disappointment, Geithner’s plan largely ensures that there will be no further failures of major US financial institutions, unless the economic situation becomes dramatically worse. If this ultimately boosts confidence in the financial system, it could produce a small economic recovery in late 2009.
For details see: UNITED STATES: Geithner plan has merit, despite doubts.
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