Friday, November 20, 2009

The audacity of timidity

Paul Krugman assesses the consequences of having done too little in the spring to combat the economic crisis in The Big Squander New York Times 11/19/09:

Earlier this week, the inspector general for the Troubled Asset Relief Program, a k a, the bank bailout fund, released his report on the 2008 rescue of the American International Group, the insurer. The gist of the report is that government officials made no serious attempt to extract concessions from bankers, even though these bankers received huge benefits from the rescue. And more than money was lost. By making what was in effect a multibillion-dollar gift to Wall Street, policy makers undermined their own credibility — and put the broader economy at risk.

For the A.I.G. rescue was part of a pattern: Throughout the financial crisis key officials — most notably Timothy Geithner, who was president of the New York Fed in 2008 and is now Treasury secretary — have shied away from doing anything that might rattle Wall Street. And the bitter paradox is that this play-it-safe approach has ended up undermining prospects for economic recovery. For the job of fixing the broken economy is far from done — yet finishing the job has become nearly impossible now that the public has lost faith in the government’s efforts, viewing them as little more than handouts to the people who got us into this mess. [my emphasis]

It's part of the Republicans' Predator State approach to government, in this case with the pattern on handling Wall Street bailouts continuing into the Obama administration: the bankrupt financial institutions get bailed out and their executives get paid billions in bonuses after bankrupting or near-bankrupting their companies, while most people see unemployment and mortgage payments both rising. And the Republicans have honed their methods over the decades for blaming the results on the Democratic Party and "gubment" in general. Unless the Obama administration starts trying to please those facing unemployment and reduced salaries instead of Wall Strett bankers and billionaires who want to abolish Social Security using the federal deficit as an excuse, the Republicans could be successful with those methods in 2010 and 2012. And the fact that Frank Rich thinks that Sarah Palin is an exotic extremist (which she is!) won't make any difference, except to encourage the Democrats in their foolish complacency.

Meanwhile, David "Bobo" Brooks, neocon warmonger and reliable belweather of "respectable" Republican opinion, thinks the Obama administration has done just fine on the economic bailout. Bobo is impressed with Treasury Secretary Tim Geithner's moderation: "prudence was the key to his effectiveness. In interviews and testimony, Geithner uses the word 'balance' a lot." This is the greatest compliment that the devotees of High Broderism can bestoy on a political figure, especially a Democrat. This gives Bobo hope for the future. Because the Obama administration confronts more economic problems. And which is foremost in Bobo's mind? Yes, it's a rhetorical question: "First, the need to reduce the deficits ..."

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