A General Revolt

Steve Clemons rips into Obama on the Geithner plan and everything else as he details the broad opposition to it (emphasis mine)

Regrettably, the Obama administration seems to be fumbling the ball on an economic policy course that restores confidence in the American economy on both the optics level and also on a substantive front that reorganizes the "social contract" and design of the real economy in the U.S.

Obama, in his 'loyalty' to his current economic team and the mistakes they are making is the antithesis of Abraham Lincoln. Obama may have tried to mimic Lincoln's "team of rivals" approach to politics -- but he needs to read the chapters on the number of generals Lincoln fired during the Civil War to finally get things moved forward.

Obama may need to fire a number of his economic generals who have been trying to restore Wall Street to what it once was -- not boldly and critically reorganize the financial sector in a way that the dysfunctional behavior that characterized its bubble success is dismantled and reshaped.

Civil society should not wait quietly while Obama's team continues to fumble -- and while its key economic policy chiefs play "point the finger" at their colleagues behind the scenes. It's time for serious discussion about what needs to be done. . .and we need better benchmarks than we have for applauding, critiquing, and simply measuring the policy steps the administration is taking.

Now, normally this would be another "Village Stupidity" or "Already Failed Obama Administration" tagged example of unfair criticism towards a President who has been in office for a mere two months, trying to fix a decade of economic disaster that has erupted like a volcano on the last President's watch.

A month ago I would have scoffed at Steve Clemons for drinking the Sensible Centrist Village Kool-Aid.

The problem now is that the criticism is pretty much warranted at this point. Obama's made his choice to go with Geithner and his plan. Getting rid of him now is more or less a non-starter, Obama has committed to his people and the course he's on. Presidents have to make those kinds of decisions.

But there is hope. That hope now at this point is that the plan somehow makes Plan N politically feasible, either through a combination of the plan creating enough political legerdemain to bamboozle Congress into accepting it or it flunks so badly it leaves Obama and Congress no choice. Building on the news the FDIC and the White House were setting up just such a manuever for banks, there is a glimmer of hope in the fact that Geithner is asking for the ability to take over and unwind "too big to fail" non-bank companies like AIG. These two articles give me a lot of hope that Plan N is still in the cards as the fallback option. Obama and Geithner both understand this.

My frustration comes from the belief that Plan N should be the first option (or at least the current one) and not the last. The President has been convinced to try this public-private partnership plan before Plan N. It's his call, not mine.

It's entirely possible that Obama may enact both plans simultaneously. As Bon the Geek reminded me this morning, "Yeah, it's disappointing. But then also there may be something we don't know."

Mainly I guess I'm frustrated to see the political process this broken to the point where Plan N just can't be implemented...and make no mistake, Plan N comes with its own pitfalls and hazards.

[UPDATE] Yves Smith isn't buying the Geithner wind-down/Plan N manuever at all.

Given the lack of any mention of a special resolution regime, or intent to develop one, the point of this bill is NOT, appearances to the contrary, to be able to put more firms into receivership. It is to get broader authority to bail them out.

Atrios is with Yves on this one. Me? It's definitely the Occam's razor solution given Geithner's history. I can't discount this is just another back door for more bailouts should we get to the Plan N stage. I want to have hope. Hope will not fix this problem.