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WILL it be second time lucky for Tim Geithner? On Monday March 23rd, six weeks after being heckled for a maddeningly vague bank-rescue plan, America’s beleaguered treasury secretary at last gave details of a public-private partnership to invest in the troubled assets clogging up banks’ balance-sheets. Cleaning up this mess is seen as a prerequisite of financial and broader economic recovery, and the Americans were keen to unveil a proposal before leaders of the G20 countries meet to seek a way out of the crisis, in early April. The new plan is certainly a lot meatier than the February effort, and markets for both debt and equities gave it an initial thumbs-up, the Dow Jones Industrial Average rising by almost 500 points and credit-derivative spreads signalling a lower risk of bank defaults. There are, alas, several reasons why it may struggle to succeed.
