Krugman vs Geithner

In case you missed it, the Nobel Laureate and darling of the BDS Left has skewered the Obama Administration's political calculations for bank bailout. 

But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.

This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. 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.

Ahem.  I beleive that one of the more recent comments about Obama is that 'he doesn't need to be defended'. That is pure zealotry, and Obama's latest meanderings into this economic crisis are officially dubious. 

Back in the good old days we had Federal budget deficits around 300-400 billion. Now it's 1.7 - 2.0 trilion. There's nowhere to run and nowhere to hide as Obama drives our great nation over a cliff of debt.