Some of you may only read (if you do) Paul Krugman's regular NYT print/Web columns. If you are not checking his blog at the paper's site every day, in these scary times (for the economy and the president) you really need to.
Case in point today, when we get a quick, and very negative, reaction to the belated news today on the Geithner/Obama plan for aiding banks. He calls it a disaster which will surely fail and imperil Obama's full economic plans. He even suggests he is "despair." I've linked and excerpted below, but first an aside.
Last July at Netroots Nation, Krugman spoke to the large crowd and I covered his remarks at the time, which are kind of ironic in light of his strong, though perhaps dead-on, criticism of the administration's economic plans today (he has backed much of Obama's overall strategy but from day one warned that the stimulus was not stimulating enough and Geithner's early bank notes troubling). Here's what I wrote from Austin last summer (it's also in my new book). Of course, Krugman could not see the economic catastrophe to come:
Speaking at an early afternoon panel at the huge Netroots Nation confab in Austin, Texas, today, Paul Krugman of The New York Times predicted, with seeming confidence, an Obama victory in November -- but added that "within three months of taking office, no, less than three months" the media would be out to get him, as much as they had at the high point of anti-Bill Clinton bashing.
Krugman was responding to a questioner who had stated that the media was "in the pocket" of the "government." Krugman pointed out that this was hardly the case when Clinton was in the White House and would be proven again when Obama took over. "Get ready for it," he warned.
Of course, Krugman's criticism today may very well be fully warranted.
Now for this blast today. If you read this week's Washington Monthly report calling our situation today far worse than you may know, Krugman's "despair" may seem quite proper (even understated).
The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won. The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank....
Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.
This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.
What an awful mess.
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Greg Mitchell's latest book is "Why Obama Won," reviewed here by SusanG two weeks ago. He is editor of Editor & Publisher.
