Playing politics with markets?
DJIA up 2 per cent, S&P up 2 per cent, Nasdaq up 2 per cent. Why?
“Tremendous progress” has been made on the TARP. So announced congressman Paul Kanjorski on CNBC this morning. The above interview being the key driver behind the rally.
We lost count of the number of times Kanjorski said it was “a done deal”. Here’s a little colour:
We’ve created a battleship. We’re ready to go to war. We’re saying we’re committing the full forces of the American people and the American government to solve an economic crisis - a freeze up - but that can be done. And I say a year from now we’re all gonna be talking about ‘do you remember how we all worried and went grey this one week in September’. And when its all over we’re gonna get right back up and get going.
Generally, going to war with the markets isn’t a sensible idea, so it may prove to be an ill-picked metaphor.
The bill has also morphed from its 3 page state - as presented by Paulson - to “42-45 page” document, according to Kanjorski. A couple of hints are dropped about its metamorphosis around 5 mins into the video clip:
We have the American taxpayers participating on the upside through warrants options and preffered stock.
We have something on mortgages to help people in real distress to keep them in their homes
And we’re going to begin to address a process on executive salaries.
Why, though, is the congressman announcing all this? Afterall, as he is keen to stress, there’s still work to be done, and things wont be finalised until last week.
This is somewhat at odds with the idea that all there is left to do is cross the i’s and dot the t’s - which is also repeated rather a lot in the interview. A question: if a whole 45 page document has been all but agreed upon in (the last) five days, why will it take (the next) four days just to ink it?
It all makes this interview seem something of an odd pre-announcement announcement.
Perhaps it’s something to do with this:
Democrats were hoping to reach a final agreement on the framework of a bill ahead of that meeting, partly to deny any credit to Mr. McCain, who took the bold step on Wednesday of suspending his campaign and announcing that he would return to Washington to help secure a deal.
(HT Felix Salmon)
