Conservative Logic

An economic guide to politics, designed for post-Baby Boomers

Even Krugman Thinks Geithner Is Wrong

Posted by A Hamilton on March 22, 2009

Geither’s plan to address the mortgage crisis has been unveiled. And it’s (unsurprisingly) a disaster. The plan misdiagnoses the roots of the crisis, and proposes a plan that not only creates a tremendous moral hazard for potential investors in toxic mortgage assets, but also put the US taxpayer on the line as the backer of an open-ended government guarantee that will likely cost us trillions.

And who benefits? Hedge funds. They’ll swoop in, gamble on the toxic assets, make a killing if they are lucky, and if they aren’t the taxpayers foot the bill. A nice little payoff to certain major Democratic campaign supporters.

You know it’s bad when even liberal lapdog economists like Paul Krugman and and pseudo-economist hacks like James Galbraith weigh in against it.

Wall Street reaction won’t be kind, either. The Obama Administration needs to get this one straight. Meanwhile, a Congressional Sword of Damocles hangs over us all. With the AIG bonus debacle, this Congress has shown that it has no compunction about passing retroactive legislation, and is likely to want its own say in the resolution of the mortgage crisis. As long as government’s position remains unclear, markets will continue to remain paralyzed, and the broader economy will continue to suffer.


One Response to “Even Krugman Thinks Geithner Is Wrong”

  1. llabesab said



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