Seems to me what Obama/Geithner are going for is short term gain for the quickest way to unfreeze credit which greases the wheels of commerce as it is currently designed. Therefore, It is is more a political plan for recovery than a long term plan for economic reconstruction, and actually lessons the immediate political hazard for Obama. The overwhelming percentage of the public does not care much for long term reform and simply wants the good times to roll again. They may be outraged that people who caused the problem, are getting made whole again, but that will be a shallow concern compared with a higher DOW and a return to easy credit and more jobs.
The problem is, that it is setting the stage for another disaster likely worse than this one down the road, unless the business model is changed as the Krugman’s of the world are rightly demanding. Far be it from me to guess accurately what Obama is thinking, but maybe he figures he can reform an economic engine better and with help from congress, if it is actually running and not dead as now. Krugman wants the changes now, but he is not a politician and doesn’t factor in the reality of politics into the equation as a limiting factor on a presidents elbow room for passing legislation.
I will have hope if this plan is followed up with brisk new regulations and necessary structural changes to our econ model, that is if temporary economic improvement doesn’t once again breed complacency.
A layman’s take
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