Hooray For Despair

Dow's up 250 plus on Shiny Geithner Plan, and Brad DeLong and Kroog are slugging it out over the thing. Brad thinks the political aspect is more important (can't fire Geithner now, Obama's agenda is at risk, etc), Kroog thinks the financial one is more important (no right price problem, recycled Bush/Paulson plan).

It's getting kinda ugly. I'm still with Kroog on this for various reasons, but Brad is right as far as the political aspect of the issue is still a consideration and must be part of the solution. Both arguments are compelling.

Kevin Drum has another perspective:

If Geithner's plan fails, we eat it. If we nationalize the banks and become owners of all the toxic waste, we eat it. This financial crisis is going to cost the government a ton of money no matter what we do at this point.

Which really is a good point, and something BooMan said over the weekend. The argument is that we should let Timmy do his thing because since the taxpayer is screwed anyway and that the diminishing returns of implementing nationalization is not worth it compared to the hassle of implementing it, plus the risk to Obama's agenda should Obama publicly fire the guy, means we should give Timmy a chance for the plan to work.

But again, that's putting political stuff over the financial stuff, and in the long run we'll be stuck with the same problem. The thing with Plan N is that the government can make sure what needs to get done actually gets done, as in "breaking up the bad banks and unwinding toxic crap". If we just went ahead and did Plan N two months ago instead of fiddlefarting around trying to solve the unsolvable No Right Price problem, we'd be that much closer to a real solution and a working economy by now.