TEXT OF INTERVIEW
Kai Ryssdal: In more normal times 10 percent jumps in the major stock market indices would set off all kinds of hooting and hollering. But when you’re down as far as we are, those gains are just a reminder of how far we have to go to get back. Which, as it happens, is a long, long way. To help us wrap up the week on Wall Street and beyond we’ve got Felix Salmon with us once again. He’s at Portfolio.com. Leigh Gallagher’s a senior editor at Fortune Magazine. Hi again guys.
Felix Salmon: Good to talk to you, Kai.
Leigh Gallagher: Good to be here, Kai.
Ryssdal: Alright. Topic of the day, gang, is the stock market. To begin with, is this rally real, or not real? Discuss. Leigh, go.
Gallagher: Well, I have to tell you. I think that it’s not real. I think this is a bear market rally. And, you know, I thought that yesterday when my mother, who doesn’t really know about finance, and called and said, “This is a bear market rally, isn’t it?”
Ryssdal: Your mom too? She did that?
Gallagher: Yes, and I think she’s right. And you know, I’ll tell you why. I mean, there was obviously some very, very small glimmers of positive news from the banks, and I think the market is so, so susceptible psychologically to any glimmer of hope that they are just ready to take it and run with it, and that’s exactly what happened.
Ryssdal: OK, but wait a second. Felix, Vikram Pandit, the CEO of Citigroup, came out and said hey, we’re in the black. Jamie Diamond said hey, we’re in the black. I mean, that has to be not bad news?
Salmon: Well, they’ve always been in the black on an operating basis. The question is how much in terms of write-downs are they going to take. And you only know at the end of the quarter how much write-downs you’ve decided to take. So it might well be that on an operating basis they made money in January and February. And that, in the grand scheme of things, is probably good news. But ultimately we don’t know whether these banks are going to make money or lose money this quarter until the quarter is over.
Ryssdal: And, of course, we don’t know how much more writing down there may be in future quarters. Right, Felix?
Salmon: Every time they’ve taken the write-down list, people have said is this is? Is this the last of the write downs? And they’ve said, yes, we think so. We don’t know for sure, but we think so. And then the next quarter they’ve taken even bigger write-downs.
Ryssdal: Alright. Let me delve briefly into the political here, Leigh. And I want to talk to you about the treasury secretary. As we heard off the top of the broadcast, he’s all alone in that big building next to the White House, they’re having trouble filling the jobs. Is that really a big problem in terms of getting this economy back on track? Or is it just much hullabaloo about nothing?
Gallagher: Well, I think it’s part of the problem. I mean, I think the problem with Tim Geithner is that from day one he was sort of introduced as this is going to be the person who is going to take us out of this crisis. And then he sort of whiffed. And from there it has just been, you know, nonstop criticism and he’s been held to this huge high standard and there’s been a lot of expectations placed on him. So, it’s sort of mixed. I mean, is it all his fault? Probably not. On the other hand, he hasn’t exactly led I think the way that people have expected and hoped. A lot will probably depend on what happens with this so-called stress test, because that is his idea. That’s his own stress test, you might say.
Ryssdal: Yeah, you might. Felix, what do you think?
Salmon:I think Leigh’s right. I think that we have seen a distinct lack of leadership from the Treasury. If anything, most of the leadership on the economic run has come from Larry Summers and the White House. And I think that has marginalized Tim Geithner. I think that Tim has failed to communicate to Wall Street that he deserves their trust and that he knows what he’s doing. And now that he’s lost that trust, I fear that it’s pretty much impossible for him to regain it. And this could be a big problem going forwards, because if you have a Treasury secretary which doesn’t have the trust of the markets, there’s almost nothing that Treasury secretary can do right.
Ryssdal: Before I let you go, guys, I want to get your take on the media war of the week: Jon Stewart from The Daily Show, Jim Cramer from CNBC. They’ve been going back and forth all week. Cramer went on Stewart’s show last night. Guys, does this really mean anything? Or is it all just nothing?
Gallagher: Well, as somebody said, he might want a job at The Daily Show. I mean, I think people were surprised at how non-argumentative it was, to say the least. But, it’s certainly made for some entertaining conversations around our morning meeting. I will say that for sure.
Ryssdal: Felix, you actually have been on CNBC. You’ve been a resident of the Deca-Box. What’d you think? And does it really matter? I mean, is this all just nothingness?
Salmon: CNBC is hurting America, and it’s high time that people like Jon Stewart really took them to task. And this should be the end of CNBC as a useful, important media force. It won’t be; they’re going to continue going on and a bunch of people are going to watch it. But really, you get much more useful information from Marketplace, frankly.
Ryssdal: Aww, shucks. Felix Salmon from Portfolio.com. Leigh Gallagher, at Fortune Magazine. Thanks guys.
Gallagher: Thanks, Kai.