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172 Comments
- Alheithinn, on 03/23/2009, -16/+51I'm an Obama supporter. I voted for Obama. I believe Obama is the best man for the job. I shudder to think about the ruination McCain and Palin would have already visited upon our nation. But I do agree with Krugman here, and I do have doubts about Obama's plan for rescuing the banks. As Krugman says, the assumption that banks are fundamentally sound and that bankers know what they're doing, is a dangerous one to make and there is no real reason to believe it. There is certainly no evidence.
I hope that Obama's plan works. I really do. But I'm not as confident of this as I have been of some of his other policies. - stutimandal, on 03/23/2009, -8/+34{{ it is unlikely that Congress will come up with more funds to do what should have done in the first place.}}
Collapse? - niradg, on 03/23/2009, -13/+33I dugg this, but I don't really agree with Krugman that this plan can't work. While it is similar to the Paulson plan, but there are some key differences. Brad DeLong has a good explanation of the plan here: http://delong.typepad.com/sdj/2009/03/the-geithner ...
- inactive, on 03/23/2009, -13/+33I'm not sure what to believe anymore. I trust President Obama, but I don't trust Geitner, not just becuase he started out his tenure with the tax issue and for the position he was going for, it just didn't bode well. But, I also think other people around the President, particularly Larry Summers, were disastrous picks. Yet, I trust President Obama's judgment.
Then there's Krugman. On one hand, I think he's brilliant. On the other, I don't ever recall him saying anything positive. And I'm not talking just recently. I mean, ever. During the two year primary and presidential campaigns, I wanted to strangle him. His comment's about politicians, not his forte mind you, were dead wrong, highly personal and betrayed his obvious preference for Hillary Clinton over Barack Obama based on a minuscule difference in their Health Care plans. And he was vicious in his disdain for Obama's difference.
So, I don't know what to make anymore. Is Krugman over-reacting because his exact way of doing things is not being chosen or, since this is his forte, is he right to be terrified, depressed and obligated to terrify us?
Oh, and Wall Street jumped immediately this morning upon Geitner's bank rescue detail coming out and is up 250 point as of this post. - allowners, on 03/23/2009, -6/+20Corporatism Triumphed, it's barbed hooks are deeply embedded in the global psyche and purse. We need foundational change, not a bailout for a failed system.
- PWoT, on 03/23/2009, -3/+16Politics aside, I can't find any two financial "experts" to agree on what the administration should do. Spend more? Less? Spend on something else? Talk up the economy to restore confidence? Be honest about the problems so we can address them? Cut taxes? Lower the deficit?
Everybody claims the answer is obvious, while saying conflicting things. For a non-expert it's a nightmare trying to follow this.
The market seems to like the plan, but not even that is an indicator, long-term. - trizzlelv, on 03/23/2009, -3/+13Right now, the market is up over 500 points. It looks like Wall Street doesn't agree with Mr. Krugman.
- rrlaw, on 03/23/2009, -12/+22I agree with Krugman that time and Obama's political capital are running out. But, like niradg, I don't agree that this plan can't work. Sure, Krugman's idea is a tried and proven plan and Geithner's plan is a bet, but I happen to believe that the real estate market is undervalued, and this plan has the potential to make big money for the government, and we all know it can use the money. By the way, didn't Warren Buffet mentioned some thing like this last year.
- MWeather, on 03/23/2009, -1/+11And here I thought men were defined by their actions, not their associations. Silly me.
- Hetman, on 03/23/2009, -2/+11Yes Micro and Macro economics work exactly the same. You make a great point. Thanks for all your information.
- kward711, on 03/23/2009, -2/+11has anybody seen how well the stock market is doing today?
- bjs3171, on 03/23/2009, -4/+11I created a digg account about 2 years ago. Why am I just now seeing this "welcome to digg" message?
- inactive, on 03/23/2009, -14/+21Obama is spending too much, not too little.
- BullBearMS, on 03/23/2009, -0/+7Supply and demand wasn't the factor that drove prices up during the bubble. People were buying multiple homes as an investment on the theory that real estate values never go down. I'd say that theory is pretty thoroughly disproven.
When newly built homes sell at a multiple of their cost of construction and builders tout 'instant appreciation', it's a good sign that rational market factors like supply and demand have long gone out of the window.
The first lesson to be learned here is that you never ever listen to the spin from people in real estate. They always can come up with some good reason why it's the right time for you to pay them a commission. - yellowdogjim, on 03/23/2009, -8/+15see: http://oxdown.firedoglake.com/diary/4366
Wigwam at Oxdown offers a Q&A that is very sharp and very concise.
or
try James K. Galbraith's take at Firedoglake:
http://firedoglake.com/2009/03/21/james-k-galbrait ...
Geithner, et al are laundering private sector losses to turn them into bright clean public sector debt.
Same ol', Same ol':
Privatize the Profits; Socialize the Debt.
There is poison in the sytem.
Who should pay for it? - RumpleForeskin3, on 03/23/2009, -1/+7Agreed. Gets me everytime. He looks like Clooney in Syriana
- johnnyg113, on 03/23/2009, -1/+7In case anyone's interested here is Krugman's response to DeLong:
http://krugman.blogs.nytimes.com/2009/03/22/brad-d ...
"Brad treats the prospect that assets purchased by public-private partnership will fall enough in value to wipe out the equity as unlikely. But it isn’t: the whole point about toxic waste is that nobody knows what it’s worth, so it’s highly likely that it will turn out to be worth 15 percent less than the purchase price. You might say that we know that the stuff is undervalued; actually, I don’t think we know that. And anyway, the whole point of the program is to push prices up to the point where we don’t know that it’s undervalued." - RumpleForeskin3, on 03/23/2009, -4/+10just for that i am going to click the red thumbs down on your comment
- inactive, on 03/23/2009, -2/+8Sometimes things gotta go down the hard way, this is one of those things.
- ironhide, on 03/23/2009, -4/+10So will the conservatives give Obama credit for this like they blamed him for the drops?
- Ranzera, on 03/23/2009, -5/+11You spend yourself out of a recession. That's how we've always fixed in the past. When we cut the spending in a recession we were rewarded with a depression. I hope I made that simple enough for you.
If you want to argue that he's spending on the wrong things, that is something that can be debated. - dmm219, on 03/23/2009, -3/+8"I happen to believe that the real estate market is undervalued"
Good luck with that bet... - aletoledo, on 03/23/2009, -3/+8I find it rather amazing that you appear to be treating this as an emotional issue and not one of fundamentals. I hate to pick on you, because many other people are saying similar things. You voted for the guy based solely on a platform of rhetorical "hope". Yet now you are being critical of a plan that relies upon "hope".
So make up your mind, is or is not "hope" enough? - dmm219, on 03/23/2009, -2/+7Mish and Denniger have been right about just about everything in the past 3-4 years (as opposed to the 99% of economists who were dead wrong...including all those on Obama's team).
Therefor, as Americans are best at, we must penalize and demonize those who are right, and continue to cover and misdirect blame for the rest who were all wrong (and continue to be...)
Being a rational a sane person, I tend to believe the people with strong evidence of actually knowing what they are talking about...but I'm pretty sure I'm in the minority, both on Digg and in the country... - phramus, on 03/23/2009, -0/+4It is just too bad the President and his Administration were so unaware of all the freakin EXPERTS waiting in the wings to advise them. It's like everybody and his goddamned brother knows the best way out of our problems! Thank you, Mr. Krugman, we'll call you. And by the way, I suggest that it is not financial policy, but rather your use of mirrors, that has you in such despair.
- ianharstanton, on 03/23/2009, -1/+5Take a seat Krugman, the rest of Wall Street showed their support with todays 500 point DJ rally.
- inactive, on 03/23/2009, -2/+6It does not work.
It may temporarily prop up a market or economy, but all they're doing is delaying the inevitable correction and in most cases the inevitable correction is worse than if they just allowed the market to absorb smaller corrections along the way. - denuded, on 03/23/2009, -2/+6there's always a chance bankers may be doing what's best for their personal investments, not what's best for the country, whereas the president's job is to do what's best for the country. both can be wrong unfortunately. and what works financially for one sector of the economy can be disastrous for another sector.
- DiggasWAttitude, on 03/23/2009, -2/+6I might be one of these people too so I will respond.
I didn't vote for Obama solely on a platform of rhetorical hope. There is a myriad of reasons. I voted for him based issues: stem cell research (science in general), pro-choice, environment, education, torture, Iraq, and many more. I also despise Palin and lost confidence in McCain. I don't think many of us voted for him on rhetorical hope.
That being said, what 'hope' can do for an economy is cannot be underestimated. Countries collapse if their people lose faith in the government, in the currency, in the banks.
Is hope enough? Of course not. But if people don't have faith in their government then all the economic bailouts, plans, etc won't even have a chance to work.
I am scared as *****, even holding off having kids for a while until I am more secure with my financial future. I see Obama being proactive, being a leader, and that gives me confidence. Maybe its unfounded but I might not hold off as long having kids, or buying a house, or investing again because of it. - Aroundtown27, on 03/23/2009, -1/+5Wall Street jumped because the plan is good for them. That doesn't mean that it will work though.
- ironhide, on 03/23/2009, -2/+6"it really feels like he's helping out the people that financed a large chunk of his campaign"
Please re-check your figures.
http://www.opensecrets.org/pres08/indus.php?cycle= ...
By your logic - retirees and teachers have more of an influence than bankers do. - Gerz1219, on 03/23/2009, -1/+5I voted for Obama primarily because I believed that he, and not McCain, had properly diagnosed the causes and remedies for the financial crisis. My decision was not based "solely on a platform of rhetorical 'hope'," it was based on McCain's stated belief that the economy was basically strong and that if left to its own devices, Wall St. would get its act together, engage in some light housekeeping, and the whole problem would just fix itself. I felt that such a hands-off policy would consign us to a lengthy Second Great Depression, and more importantly I got the impression that McCain was too ideological to change course if his policies weren't working.
It's true that Geithner is taking a risk here, in the sense that nobody has ever tried a similar approach to a financial crisis like this. I'm not sure that anyone without a PhD in economics can really evaluate the Geithner plan against competing alternatives, so in that sense this *is* an emotional issue.
What does seem clear is that as a political calculation, Obama really really does not want to be seen as nationalizing the banks as a first resort. I'm guessing that his logic is, if the Geithner plan fails, it's because this toxic waste is worth *a lot* less than anyone thought, which means we're already in the Second Great Depression. Taxpayers will still be on the hook, but for about the same amount as they would have been if the government had just nationalized the banks in the first place and directly controlled these toxic assets. Obama would then be able to throw up his hands, fire Geithner, and follow Krugman's glass-is-half-empty policies.
If Geithner is right, then we'll clear up the toxic waste at a profit for the taxpayer. If Krugman is right, then taxpayers will owe another $2 trillion and Obama will go down in history as the one-term president who irretrievably created a centrally-planned economy. It's easy to see Obama's resistance to Krugmanomics. - Crazyredivan, on 03/23/2009, -1/+4That's because it heard what it wanted to hear.
- quarando, on 03/23/2009, -1/+4Unfortunately, as painful as it may be, we need to fix Wall Street before we can fix the economy. So many of the same people who worked so hard to screw all of us will be the people that suffer the least in this crisis. Some may even benefit from it. If we are unwilling to accept this reality, then the recession will look more like the 1930s than the 1980s.
The best we can hope for is that real regulation and reform is put in place once the crisis passes. So yes, Obama will do what is best for Wall Street, because the ugly truth is that helping Wall Street is what is best for the country during this crisis. - ironhide, on 03/23/2009, -0/+3I smell a Ron Paul supporter.
You guys have a shared script don't you? - inactive, on 03/23/2009, -3/+6Thank you for posting that.
Common sense seems to be lacking everywhere these days. - 1longtime, on 03/23/2009, -0/+3Up 497 points after close. Wow.
- C0ntraRadical, on 03/23/2009, -0/+3That's actually not entirely true. Some government announcements move the market, some don't.
The lesson everyone should take is that short-term movement means very little in the long-run. - xexx, on 03/23/2009, -1/+4Except Bush ruined the economy while spending, Obama is spending to fix what's already ruined.
- silentboom, on 03/24/2009, -1/+4All empires have collapsed and fiat monies all return to their intrinsic value of zero. That is not a good result.
- inactive, on 03/23/2009, -0/+3AOL Keyword: duh
- inactive, on 03/23/2009, -0/+3"It does not belong to man even to direct his own steps"
True dat, I let the tooth fairy in the sky tell me where to go. - akula89, on 03/23/2009, -5/+8what?
- StripeyMagee, on 03/23/2009, -1/+3It's still a ripoff. ***** the banks and insurance companies. If they can't stay afloat with their ponzi scheme, let them swim with the sharks!
- inactive, on 03/23/2009, -2/+4Obama did not move to nationalize the banks...so much for him being a Socialist.
- quarando, on 03/23/2009, -1/+3Don't underestimate the importance of emotion. This is both a crisis of fundamentals and of confidence. If we can make some progress on the fundamentals, then hope can go a long way. So the ability to inspire emotion in citizens is a very important characteristic in a president.
- yaosio, on 03/23/2009, -4/+6As long as you don't count all the times it has worked, it does not work.
- inactive, on 03/23/2009, -1/+3Problem is that at this point banks are only interested in solving their own immediate problems, which aren't necessarily aligned with the problems of the economy as a whole. They can't be expected to be spontaneously altruistic.
- quarando, on 03/23/2009, -1/+3Of course Obama is in over his head, who wouldn't be. He is certainly not melting down, however. He is one of the few calm and thoughtful public figures and we are lucky to have him. In the end he may or may not be able to turn the economy around, but I think given the mess he stepped into, he is doing about as well as one could reasonably expect.
- quarando, on 03/23/2009, -2/+4I think you have been watching too much Glenn Beck.
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