Is the Obama economic team dumb, or evil? (Or maybe, uh, neither.)

But where is the evidence that Geithner, et al give a flying f@ck about the "real economy"? He had to be dragged kicking and screaming to get behind mortgage modification--and then designed a plan that was more about subsidizing mortgage servicers/banks and wealthy homeowners than it was about saving homes for average americans.
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And again, this plan is nothing more than another giveaway to the wealthy -- and designed solely to keep his wall street golfing buddies happy. I've got lots of toxic assets myself --- broken TVs, obsolete printers, cheap cameras that no longer work -- and would be thrilled if Tommy G came and bought up my crap -- I'd even promise to go out and spend the money he game me for this stuff. But here on "main street", the government doesn't buy our assets that nobody else wants... that only happens for the billionaire boys club that is Timmy Geithner's Wall Street.

Look, a functioning financial system is clearly required for a successful economy. And due deference should be given to the Burkeian principal that society evolves the solutions to problems that it is able to support --e.g. --that the principle of "form follows function", combined with possibly non-obvious constraints imposed by the nature of American society mean that --to a large degree --the system will not change structurally.

This is not the same thing as showering largesse upon the leaders of the previous regime on the principal that they can be relied upon to fix what they have broken. All evidence is that the thinking exhibited by the corporate elite in general, and the financial elite in particular, is short term, and primarily focused upon managing their corporate entities to produce maximum short term returns to themselves.

Just to get a grip on what we are talking about --$900 billion is approximately $3000 for every man woman and child in the country. A family of 4, with an average income of maybe $60,000, is incurring a debt obligation of $12,000.

I don't doubt that Obama gets this. What is at issue is the following --are the people "running" Wall Street far-sighted operators who happened upon a spot of bad luck? Or are they self-serving palookas who can't be trusted? If they are the former, the plan MAY make sense, unless, as Felix Salmon suggests, these self-same leaders are unwilling or unable to mark down these assets to pricing levels that anyone will be willing to pay.

In other words, the asymmetrically arranged risk schema, where the government assumes all loan risk and 1/2 the "down-payment" risk may not be enough to raise asset values to a level in the market where the banks are willing to sell them.

Who knows? What is far more germane is whether the same folks who architected this mess can be trusted to accept our (huge) influx of public money and create an acceptable solution. If the answer is yes, the plan should be tried. If the answer is no, the banks that would already have been in bankruptcy need to be "nationalized" or allowed to go bankrupt.

So please quit defeating "straw horse" arguments that nobody intelligent is making, and address a fundamental question: --why should we trust these people with our money? Or should we be contemplating “regime change”?

That's been my main problem all along. I like William Gross, but, when this crisis hit and he basically endorsed a version of the current plan, he said this:

"The Treasury proposal will not be a bailout of Wall Street but a rescue of Main Street, as lending capacity and confidence is restored to our banks and the delicate balance between production and finance is given a chance to work its magic. Democratic Party earmarks mandating forbearance on home mortgage foreclosures will be critical as well. If this program is successful, however, it is obvious that the free market and Wild West capitalism of recent decades will be forever changed. Future economic textbooks are likely to teach that while capitalism is the most dynamic and productive system ever conceived, it is most efficient over the long term when there is another delicate balance -- between private incentive and government oversight."

In my view, he underestimated the gravity of the crisis. He focused on economics and cosmetic changes. That's why he seemed to have a tin ear when he said that he'd work for free. The crisis simply needed some investing advice. Conflict of interest and collusion problems eluded his grasp.

He knew, for sure, given his treasury investing in 2008, that many investors believed that there was an implicit guarantee for the government to intervene, especially after Bear. So he gets how the system was running.It was no Wild West. I'd have been impressed if he'd used that expertise to say that our system is a welfare state in which certain interests dominate. Based on those assumptions, bankers and investors, and the government, got us into a veritable catastrophe. Going forward, we're going to have to break up that relationship, which will take political will and savvy.

Bernanke and Geithner are saying the right things today. In the case of Bernanke, I simply believe that he has been too slow and deferential. As with Gross, he knows the score, but has been too reticent to spit it out. Reading Geithner's earlier speeches, he seems to have been aware as well.

I don't know if it's that they want to keep the status quo or are just being pragmatic, but I do believe that they know how the system runs and how broken it is. They have the knowledge to provide real leadership. I'm praying, as with QE, that it is merely pragmatism and real restraints that have tied their hands, and that, going forward, they will make the tough choices.

Justin Fox is correct in saying that he was among the earliest to talk about the Swedish Plan. To me, that meant acknowledging that we didn't have a method to seize large banks or investment firms, and needed to get going. Whether we had to seize any of them was an open question. It does seem like it has taken a long time for them to acknowledge the obvious, although, in my case, it is true that I believe that they could have given more incentives to the B of A or Barclays to save Lehman. So I've assumed that they made a very bad bet and lost, and I lost a lot of trust in their savvy. Now, I hope that they're on track, because, quite frankly, they're the ones running the show.

I am impressed by Don's post. I am also grateful to Justin Fox for his early exploration of the Swedish model. Franfly, I would be far more comfortable if it were being pursued.

What I don't understand is that the statement above implies that any and all criticism must fall into various camps. I think most of these critics are people who sincerely and honestly believe that this is a bad course of action and is potentially uncorrectable. I understand many are trying to read into this situation ways in which the government might actually get around to doing a full intervention - but this avoids the central problem. This President has routinely publicly and clearly stated that he does not think a Swedish style intervention is necessary or a prudent course of action. He does not want to do this and neither does his Treasury Secretary. There statements do not express or leave room for even the tiniest bit of doubt. So, even if your assumptions are correct and we eventually nationalize - President Obama ends up with a Jon Stewart problem of having all his clear, unequivocal past statements come back to haunt him and completely undercut any credibility he has going forward in his attempt to correct course. In this, I do not think he is evil or stupid, but I do think he has overlooked a glaring vulnerability in his stance.

In his own words on the Tonight show regarding the AIG bonuses, he said they got a legal opinion that said the bonuses had to be paid but that they made the mistake of overlooking moral and ethical issues involved in the payouts. I believe that this new plan commits the same error and once the moral and ethical thicket of this approach is laid bare, he will have lost the public's trust.

I don't see how demonizing good faith concern over aspects of this plan is any different than those who argued that Americans who opposed the invasion of Iraq were un-American. I am a critic, but I was also a supporter of this President and gave money to a political campaign for the first time in my life in this election. My concern is that the popularity of this President isn't strictly about people liking him, but also a fear that this he is our last option. If he fails, we are rudderless and penniless and that is a fatal combination.