...So what is the plan? I really don’t know, at least based on what we’ve seen today. But maybe, maybe, it’s a Trojan horse that smuggles the right policy into place.
hardly reassuring. Martin Wolf of the Financial Times is cogent and terrifying:
What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.
Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.
The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this “progeny of the troubled asset relief programme” fails, Mr Obama’s credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it.
Mr. Wolf explains that we are dealing either with a liquidity panic or with the insolvency of a notable swath of the banking sector, and continues:
Waddya expect from a guy who shilly-shallyed for two years before squaring away his tax problem?
IF YOU ARE HAVING TROUBLE GETTING NERVOUS: For folks unfazed by the slow clapping which greeted today's news, maybe the mortgage relief progem to be announced next week will induce panic. And why might it do that? I have no idea what form the relief will take, but if the perception takes hold among the great unwashed that folks who actually make their monthly mortgage payments are suckers and that those who default on their obligations will get government assistance and a shoulder ride from Nancy Pelosi and other Dems seeking "victims" of the evil predatory lenders, well... it shouldn't take but a month or two to crash the whole system.
[END OF WORLD AS WE KNOW IT]