Legal Commentary

US = Japan 1990s

By Big Tent Democrat

Paul Krugman point us to Adam Posen's analysis that Obama/Geithner are following the path of Japan in their Lost Decade. The essence is this:

What the Obama team is proposing is disconcertingly similar to the actions of Japanese Prime Ministers Hashimoti, Obuchi, and Mori in 1995 and 1998: Rather than ask the legislature for straightforward recapitalization money, you have the political leadership preferring to risk overpaying current owners of toxic assets rather than forcing sales. For all of Japan’s supposed intervention in markets, its government still lacked the stomach for taking over banks, let alone closing them.

Nothing we have not heard before. But I think Krugman's postscript is the really interesting part:

To be fair: the Obama team really does face huge political obstacles in doing the right thing. Maybe it really can’t be done; as Rahm Emanuel said about me, “[unprintable].”

The problem with accepting this at face value is that Obama/Geithner have not even tried to politically sell a truly effective plan. Maybe they can't do it. But you never know unless you try.

And let's be honest, the Obama Administration has shown no desire or even interest in exploring a different solution. This is the plan that Obama, Geithner and Summers want. They are not hoping or trying for something better.

Look, if you think the Geithner Plan is the best alternative we have, then you should be happy with what they are doing. Some of us think it is a recipe for disaster. That's why we rail against it and hope it gets derailed. It's that simple.

Speaking for me only

Full post as published by TalkLeft on March 31, 2009 (boomark / email).