Lessons in Sang Froid

Tim Geithner spoke at Dartmouth over the weekend. What did we learn?

For one thing, we learned that he is pretty sanguine about the debt-ceiling negotiations. “You’re going to see political theater,” he noted. “There will be six episodes of failure before people do the right thing.” Considering that a default on the debt would be a disaster, that’s good to here. He noted that no responsible person believes that the US can default its way back to fiscal stability, and that Congressional leaders are responsible.

In fact, several observers noted how calm he seemed. Compared to 2008, the debt-ceiling issues, combined with fears of a European debt rescheduling, seem like small potatoes. Yes, we need to rebuild the banking system, probably with more capital. And yes, we have 14 million unemployed, many of whom have the wrong skills for the jobs that are available. And yes, we’re facing a lot of uncertainty.

But Tim was at Ground Zero during the financial crisis. According to one reporter, there was a daily conference call with him, Ben Bernanke, and two Fed Governors. Seeing Bear Stearns fail, FNMA fail, AIG fail, Lehman fail, and The Reserve Fund fail didn’t help his blood pressure. We really did look into the abyss during those dark days.

So walkouts, speeches, grandstanding—they’re part of the act. We’re three acts into a predictable five-act play. In the end, responsible people act responsibly, he’s saying. Here’s hoping he’s right.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2017-07-17T12:35:04+00:00 June 27th, 2011|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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