If Paul Krugman is worried about Obama/Geithner's bank fixing policy, we should all be worried

[BurtWorm]

http://krugman.blogs.nytimes.com/2009/02/26/feelings-of-despair/

February 26, 2009, 11:22 am
Feelings of despair

There’s so much to like about where Obama is going — health care, transparency in government, ending the war in Iraq. And the stimulus bill is OK, though not big enough.

But on the question of fixing the banks, many of us are feeling a growing sense of despair.

Obama and Geithner say the right things. But Simon Johnson nails it:

How long can you say, “we are being bold” when in fact you are not?

Obama and Geithner say things like,

If you underestimate the problem; if you do too little, too late; if you don’t move aggressively enough; if you are not open and honest in trying to assess the true cost of this; then you will face a deeper, long lasting crisis.

But what they’re actually doing is underestimating the problem, doing too little too late, and not being open and honest in trying to assess the true cost. The actual plan seems to be to keep the banks semi-alive by implicitly guaranteeing their liabilities and dribbling in money as necessary, all the while proclaiming that they’re adequately capitalized — and hope that things turn up. It’s Japan all over again.

And the result will probably be a deeper, long-lasting crisis.

[Metta]

1. Geithner clearly doesn't care about anyone but his Wall St. buddies.

He's tainted from before the beginning of his tenure at Treaasury.

[emilyg]

2. Kick

[CoffeeCat]

3. And this is partly why the economy won't recover...

...anytime soon.

Americans don't have faith in the economy being fixed. They were once carefree and happy--spending
like wild banshees. Now, they're scared shitless, hunkering down in their houses and squirreling away
every dime they can find.

It's going to take more than promises to get America to start spending again. People are afraid to go
out to dinner or to buy non-necessities because they're afraid that any day--they may lose their job.

Real signs of recovery must happen before the economy can heal. Words won't do it. Creating more
obvious bubbles won't' do it.

This certainly isn't Obama's fault. The greedy Republicans created this entire disaster with their regulation
stripping and their kow towing to the corporate elites.

It's so frickin sad. The country is traumatized. This is an economic 9/11--and people won't return to normal
until they trust that things are getting better.