Still Dithering

As I have written previously the Obama Administration is not dealing with the financial crisis. Today, Krugman writes:

[Obama] officials still arenít willing to face the facts. They donít want to face up to the dire state of major financial institutions because itís very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the presidentís fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

Speaking for me only

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    I guess at this point (5.00 / 1) (#2)
    by Militarytracy on Fri Mar 06, 2009 at 08:08:02 AM EST
    we can consider the rumors that Obama believed the United States should be beyond New Deal economics not just a rumor.

    On NPR this morning (5.00 / 3) (#3)
    by ruffian on Fri Mar 06, 2009 at 08:38:11 AM EST
    the analyst, sorry, I cannot remember his name, described it as making it up as they go along.

    I get the impression they have chosen to go slowly and incrementally so as not to spook the horse. Is Obama the Economy Whisperer? He'll either tame the beast and ride it into the sunset, or get kicked in the head. FDR or Carter, as BTD says.

    After reading this article (5.00 / 2) (#5)
    by jbindc on Fri Mar 06, 2009 at 09:26:13 AM EST
    I don't think it's dithering on the part of the administration,  It sounds more like a) this is the plan we want and we are going to wear you down until you agree with us (ala Bush) or b) (and more frightening), this sounds like "We don't know what we're doing and have no clue as to what to do next."

    Third option (5.00 / 1) (#6)
    by Spamlet on Fri Mar 06, 2009 at 09:35:33 AM EST

    Fourth Option... (none / 0) (#14)
    by santarita on Fri Mar 06, 2009 at 11:43:24 AM EST

    yes, and god forbid (5.00 / 3) (#8)
    by cpinva on Fri Mar 06, 2009 at 10:35:49 AM EST
    they should ask someone, like, oh, i don't know, a nobel prize winning economist, for their input. there must be one of those around somewhere, who maybe has thrown out an opinion or two, or three, about the situation.

    where oh where might one o' them nobel prize winning economists be, do ya suppose?


    Nobel Prize Winning (none / 0) (#15)
    by Socraticsilence on Fri Mar 06, 2009 at 12:49:17 PM EST
    is a bit weak to tout as a credential- I agree with most of Krugman's analysis, but for economists the Nobel Committee is separate from every other award, and has in the past awarded lumanaries such as Milton Freidman ( in retrospect which award is more embarrassing the Freidman one of Kissinger's Nobel Peace Prize?)

    You must be joking (5.00 / 2) (#17)
    by Big Tent Democrat on Fri Mar 06, 2009 at 02:23:33 PM EST
    Friedman, as much as you may disagree with his public policy prescriptions, did groundbreaking work on monetary policy.

    A Nobel Prize in Economics is a very strong credential for expertise on economics.

    Just  because you are an expert does not mean you are right of course.


    And the fourth option (5.00 / 3) (#7)
    by cal1942 on Fri Mar 06, 2009 at 10:33:36 AM EST
    Bernanke, Geither, et al simply can't get their heads around what must be done.  These are very much establishment type guys and Obama goes along, I believe, because he simply has no real conviction, a leave it to these real smart guys attitude. In many ways I believe that Obama is a quintessential establishment type. If he weren't the Village would have eaten him for lunch in 2007.

    Of course FDR was an establishment guy but had the conviction and knew that the mold must be broken. He was big enough to do just that.

    Obama and Congress Both Are... (5.00 / 0) (#11)
    by santarita on Fri Mar 06, 2009 at 11:21:14 AM EST
    dithering.  I try to watch as many Congressional hearings on banking as I can.  One theme that I hear coming from Geithner and Bernanke is that they don't have the authorities they need to unwind some of these too big to fail institutions.  Another is that they have identified gaps in the regulatory authorities that Congress needs to fill.  I haven't seen comprehensive legislation proposed by Congress or by Obama yet.  

    Now we have our leaders in a screaming match! (none / 0) (#18)
    by BrassTacks on Sat Mar 07, 2009 at 12:04:30 AM EST
    Screaming match on the Hill over spending bill.

    Our economy is in the tank, and EVERYONE in Washington is dithering.  It's infuriating.  

    Every day that they dither, unemployment goes up and more of our investment money is lost forever.  While they dither, Rome burns to the ground.  Political fools who are too afraid to do what's right.  

    Remind me again of all the CHANGE that Obama has brought to Washington.  


    but, but............... (none / 0) (#1)
    by cpinva on Fri Mar 06, 2009 at 08:03:24 AM EST
    wouldn't that make us the USSA? according to the right-wingnut scream machine, this would be nothing short of the communisting of the US.

    they offer no alternative, other than letting the country slide into economic collapse, but they don't have to, they're just "entertainers". i assume their funds are safely hidden in a cave somewhere.

    unfortunately, the obama administration seems to be actually listening to them, and assuming they speak for a far larger % of the electorate than they actually do.

    until they start ignoring the limbaughs, cramers, hannitys, oh my!, they'll continue to dither.

    Curious as to how (none / 0) (#4)
    by CoralGables on Fri Mar 06, 2009 at 08:43:53 AM EST
    they intend to fund the FDIC's deposit-insurance fund if banks start to fail in mass.

    With 41 bank failures since the start of 2008, and no end in sight, that fund is beginning to take a hit. To some Friday is payday, but it's also bank failure day when at closing time today the failed bank streak tries to make it 8 straight Fridays with an FDIC takeover.

    FDIC Has Already Requested.. (none / 0) (#9)
    by santarita on Fri Mar 06, 2009 at 11:15:53 AM EST
    $250 billion increase from Congress.

    And raising banks' fees. (none / 0) (#10)
    by oculus on Fri Mar 06, 2009 at 11:18:55 AM EST
    Yep... (none / 0) (#13)
    by santarita on Fri Mar 06, 2009 at 11:42:09 AM EST
    probably should have been done during the Bush Administration.

    It appears to me (none / 0) (#16)
    by Steve M on Fri Mar 06, 2009 at 01:03:34 PM EST
    Facing the Facts is Really the ... (none / 0) (#12)
    by santarita on Fri Mar 06, 2009 at 11:41:05 AM EST
    theme of Krugman's article.  The Administration is dithering because it is unwilling to face the facts that the large banks and AIG are insolvent and to propose the only remedy for this - nationalization.  

    Yet with regard to AIG, the Fed representative yesterday testified that the Fed is pursuing the orderly liquidation or restructuring (including downsizing) of AIG.  To the Fed's mind orderly liquidation requires funding of on-going business to obtain the best value for the sale of the units.  

    With regard to the megabanks, Treasury seems to be pursuing the same policy of keeping the banks afloat while it pursues orderly liquidation or restructuring.  

    In Chapter 11 bankruptcies, there often is a period of DIP financing while all parties try to determine whether restructuring or liquidation makes sense.  I see the same here and am not troubled by the concept of trying to maintain on-going operations while the parties get a better idea of what the scope of the problem is and what the remedies are.

    What is troubling is that Fed and Treasury appear to believe that the real estate bubble will reinflate in the next few years and that the fair market value of the toxic assets will magically increase.  This looks like throwing good money after bad.