The administration’s plan is attractive, but are there too many strings attached?
By Ian Bremmer and Sean West of The Big Money
Last week, markets bounced 7 percent the day Treasury Secretary Tim Geithner released his Public-Private Investment Plan. It’s clear why investors reacted positively to a plan that subsidizes private investment through public risk in hopes of getting the financial system functioning normally again. What’s less clear is whether participation makes sense for private investors from a political risk perspective—and whether the administration will be willing to insure against that risk with a commitment of its credibility.
The political risk premium attached to U.S. investments is higher than at any time in recent memory. All corners of the market are depending on Washington to “get it right.” That a bad speech by Geithner could apparently destroy the Dow on Feb. 10 and a good policy release could boost it a month later demonstrates the strong impact politics is having on finance. No investment is immune from politics for the time being.
Top Gaining Stocks
Top Losing Stocks