The banking crisis is driving me to distraction. I don't know why, exactly. There are many other worthy objects of preoccupation in today's calamatious socio-political landscape, I can't really understand why this one has gotten under my skin. I have no training in economics or finance. I do have a (very) small business, so I suppose that has something to do with it. But I feel like there is an insistent, intuitive, nagging suspicion that keeps asserting itself from whatever part of me is plugged in to the political unconscious that says that without a real plugging of the hole in the financial dyke that is the banking crisis, all of the healthcare fixes and ambitious new budgets and stimulus plans and energy plans and progress in Afghanistan and transparency and civility and truth comissions is just more rearranging of the proverbial deck chairs on a ship that was simply too big to fail.
I am so happy there is Paul Krugman.
But among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.
So Krugman in his latest column.
I just don't understand what Obama is doing. I mean, does Obama really think that Krugman and Roubini and Stiglitz are WRONG and that TIM GEITHNER is right? What is going on here? I am getting tired of combing the news for a sign that an adult is minding the store. But what I find instead, Krugman describes all too well:
Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.
Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.
I am seriously feeling that Obama and company know what to do, and are afraid to do it. And this, I think, is very, very bad. The Overton window is open. Obama has popularity to spare. So why not do the right thing? Instead of more corporate welfare:
Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued.
If there is one thing that could do some serious damage to Obama's popularity, it is populist anger over showering Wall Street institutions with the hard-earned money of regular people, however much it is explained that "it's not about the banks, it is about getting the credit that Main Street needs flowing again", people have a visceral reaction to using money in this way, and when it fails, which it almost certainly will, there will be a lot of bitterness about it.
There is one thing to be grateful for, and that is that Krugman seems willing to keep saying this, over and over and over again. It must be hard to know you're right and have people in a position to solve the problem ignore you. Here's hoping that they wise up, and quick.
UPDATE: Please call the Treasury and tell them to nationalize, thanks to robertacker13
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
General Information: (202) 622-2000
Fax: (202) 622-6415
here's the white house numbers.
(202) 456-1414
(202) 456-1111