G7 Finance Ministers: They came, they saw, they communique

One could argue that Iraq would ultimately be better off with open markets, but at the time the greatest need was to simply get things working again.

- Review of Imperial Life in the Emerald City: Inside Iraq's Green Zone

It played while Baghdad burned. Now it certainly looks as if Bush Administration is determined to play (it's usual) ideological games -- this time, while Rome burns. Paul Krugman blogs about the pathetic communique arising out of the meeting of G7 finance ministers in Washington DC:

And here it is. My initial take: it’s written in code — and that’s a bad thing. For example, that phrase about “Ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources” sounds to me as if there was some tense negotiation over language that two warring parties could live with — one (presumably the Brits) wanting a British-type recapitalization, the other (Paulson?) still hoping that the Warren Buffetts and Saudi princes of the world will come in and save the day. That’s not at all a good sign — and anyway, will investors be able to crack the code, or will they just see that the G7 statement was vague, and panic further?

They will surely panic further. The lack of substance emerging from the high-level finance minister's meeting was truly horrifying.

Krugman agrees with George Soros that the US government must now take equity stake in failing banks. (See here.) The US will have to nationalize failing banking institutions -- and the sooner the better.
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* In a column Krugman previously made the comparison between US Administration policy in the Green Zone and its approach to domestic policy. But at a time when the US itself faces economic collapse, it's simply breathtaking that the administration remains quite so square-headed in its adherence to its ideological agenda.