A New Economic Crew in Town

At around noon Eastern Time, President-elect Barack Obama made it official: Timothy Geithner will be U.S. Secretary of the Treasury and Lawrence Summers will be director of the National Economic Council. Interestingly, neither man has ever worked in a major capacity for a Wall Street bank, as have many previous shapers of U.S. economic policy, though Geithner has been an important liaison between the banking industry and the government as head of the New York branch of the Fed. Word is the new crew is already working with current Treasury Secretary Henry Paulson and the old crew to forge a $500 billion stimulus plan–considerably more than suggested during the campaign–for Obama to sign as soon as the inauguration festivities are over, provided Congress goes along. “If we do not act swiftly and act boldly, most experts now believe we could lose millions of jobs next year,” Obama said at a press conference in Chicago today. “We do not have a minute to waste.” On the whole, stock prices were up today in response to the Obama announcement and the fact that Citigroup has seen the abyss, and (maybe) the government has pulled the banking giant back from the edge. The Dow Jones index shot up in the morning and then stayed up–instead of its recent yo-yo pattern–ending with a 396.97-point gain, or 4.97 percent. The S&P 500 and the Nasdaq were also up today, 6.47 percent and 6.33 percent respectively. Not every stock avoided trouble, though. Title insurer LandAmerica Financial Group Inc. saw its share price crater this morning, losing roughly 88 percent of its value, in the wake of Fidelity National Financial Inc. walking away from an acquisition of LandAmerica. Now that the deal is off, it’s thought that LandAmerica will be obliged to file for bankruptcy. This sort of news keeps coming with depressing regularity: The National Association of Realtors’ latest report on U.S. home resales, out today, says the purchases of existing houses dropped to an annual rate of 4.98 million in October, and the median price of a house fell 11.3 percent from October of last year, the steepest drop since the trade organization began tracking prices 40 years ago.