On the 17th, I posted a diary about the Treasury's Troubled Asset-Based Loan Facility (TALF) asking the question: , "Isn't the way they're structuring this just a repetition of the same practices that got us into this whole mess to begin with?
Krugman's blog post entitled "Despair over financial policy" answers my question and Krugman does indeed sound in despair. He observes:
"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. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved." http://krugman.blogs.nytimes.com/...
Kossacks have echoed these concerns in numerous postings and comments. Does anyone have constructive ideas on how to get the ear of the Administration? I confess I don't, but wiser heads than mine are blogging here.
As a base-line assumption, Kossacks appear generally pleased with our president's performance to date, with the glaring exception of the Treasury Department. Remember, Obama has said recovery is a stool with 3 legs: the economic stimulus package (good), reforming and updating regulatory oversight (good) and financial system support.
Economists agree on the need for this third prong. Kossacks, too, generally seem to get this. It's just that neither major leading economists nor most Kossacks appear aligned with the approach being taken.
Can anything be done? Obama is going on late night TV proclaiming his loyalty to Geithner. Summers appears as well-entrenched as ever. Krugman et. al, continue to express valid doubts about the methods being used to fix the financial system. Hard to say this, but it all has the same sense of stomach turning inevitability present in 2002 as the prior administration was beating the drum for its crazy plan (you know, the one that led us to Iraq where we remain SIX years later).
If anyone has constructive ideas on what if anything can be done, let's explore. As Krugman concludes:
"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."
Indeed.