Tuesday, March 24, 2009

Has Obama lost his mind?

Today's NY Times op-ed by Paul Krugman is must-read.
. . . Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

. . . the Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt. So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets.

The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.

This is also sheer madness. Let us hope the demonstrations in London are huge, and that Americans also take to the streets. Only timely and massive outrage across the Atlantic can save the Obama presidency -- and ourselves.


  1. The Obama team (Geithner, but esp. Summers, Rubin) are the ones who gave us deregulation of this industry in the first place under Clinton.

    The real question is why we fought so hard to elect someone who was not Clinton, and we have a Clinton administration in the appointee process.


  2. J,

    Good point, good question.

    Of course, once Obama won, the claim was that the Clinton people were the only ones with the experience to take charge of the situation.

    In terms of anticipated policy changes, I never saw much difference between Clinton and Obama, and could never get too passionate about one over the other. In the end I was more impressed by the way Obama ran his campaign -- suggesting he might be somewhat more skillful about executing policies.

    But we all remember that Obama promised real change, and we're waiting...

  3. I'd rather have seen Goolsbee and Volcker in the positions of power that we found recycled Clinton folk in. It was that team we voted for. There are plenty of qualified people out there besides a recycling of Clinton appointees. The problem is that the ones doing the appointing are not people who were with the campaign.


Because all comments on this blog are moderated, there will be some delay before your comment is approved.