The last week of winter was not kind to President Obama or Treasury Secretary Geithner. Critics' voices got louder and insisted that the administration was not up to the task of restoring confidence in our financial markets and institutions. The late-night visit with Jay Leno by the President did not help and there started to be calls from some quarters to replace Tim Geithner with Larry Summers.
As we started spring on the morning of March 20th, we had snow flurries in New York City and the first full week of spring remained winter-like, by and large cold and damp from a weather perspective. For the administration, though, spring arrived when Secretary Geithner moved from a bank recovery blueprint several weeks ago that was not well received by the markets to a plan to use both public and private funds to remove toxic assets from the banks' balance sheets. Wall Street, even with a down Friday, reacted very positively and the Dow finished the week up 6.8%. The 17% gain over the past three weeks was the "best three-week stretch since September of 1982." (WSJ 3/28/09) I've spoken with a number of individuals who have re-entered the market for the first time since the fall. And I have consistently stated that the recovery would not begin until we had a plan that met the markets approval to restore the balance sheets of the major banks by removing the toxic assets. With that plan in place, a recovery will begin.
President Obama ended the week by hosting a meeting with the heads of the major banks. The rhetoric at this meeting was much cooler than it was during the AIG bonus debacle a week earlier. The bankers emerged from the meeting talking about cooperation with the government in solving the current credit crisis and restoring growth to the U.S. and our trading partners' economies.
For those of us in the media business, I believe that we will see a much-improved 2nd quarter, with advertising starting to rebound off the floor of November-February. Credit markets will also start to show some daylight, but EBOs (equity buyouts) will remain the most viable transactions at least through the summer, as many overleveraged deals from '06 and '07 will continue to struggle.
In the midst of the economic turmoil, March Madness roars on, with the Big East demonstrating its dominance and strength. My personal favorite at the start, Rick Pitino's Louisville Cardinals, remain my pick to win it all after their dominating 103-64 win over the supposed Cinderella Arizona Wildcats. Each time I watch the Cardinals I am impressed by their athleticism, strong defense and bench strength.
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