Krugman: WH Has Decided To "Muddle Through On The Finanancial Front"

[kpete]

Krugman:

....the White House has decided to muddle through on the financial front, relying on economic recovery to rescue the banks rather than the other way around. And with the stimulus plan too small to deliver an economic recovery ... well, you get the picture.

Sooner or later the administration will realize that more must be done. But when it comes back for more money, will Congress go along?

My guess? No.

.........................

So here’s the picture that scares me: It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed.

But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked.

O.K., that’s a warning, not a prediction. But economic policy is falling behind the curve, and there’s a real, growing danger that it will never catch up.


http://www.nytimes.com/2009/03/09/opinion/09krugman.html

[Bonn1997]

1. Great points! I have to think or at least hope that the Obama administration is smart enough to have

thought that scenario through when requesting this specific stimulus package.

[readmoreoften]

6. Doubt it. /nt

[Johonny]

9. I agree

I think this is much like the 1930s where the white house can only do so much against the other two branches of government. It's going to take a fundamental change in the American voter to keep these reforms moving. The process may have to be unfortunately slow.

[marketcrazy1]

2. I think we will hit 10 percent unemployment by august

or sooner, if the white house HAS decided to "muddle through on the financial front" as Krugman states then we are REALLY screwed!!!

[readmoreoften]

7. My bet goes on sooner. /nt

[Demeter]

3. And That's The Best-Case Scenario

Everything else is much, much worse...see Latvia, for example, or Iceland.

[kentuck]

4. At the rate we are going...

We could pass 9% unemployment before the first day of summer.

[readmoreoften]

5. Absolutely a best case scenario. It's like he's tone deaf on economic reality.

Having free-market corporate protectionists like Summer as his "go-to team", people who caused the mess in the first place, isn't helping.

[girl gone mad]

8. I think Obama is just too much of a natural optimist.

There has been a lot of research into how the brain operates in decision making. Optimistic people tend to be bad at predicting outcomes and they underestimate the importance of chance and circumstance (IOW, optimists believe people have more control over events than they actually do).

Obama has every reason to be an optimist, considering his life story and his accomplishments. Unfortunately, this mindset might be clouding his judgment to some extent when it comes to our current economic situation.

[readmoreoften]

10. His largest aggregate campaign contributions were from the financial sector.

People also tend to rationalize why decisions which benefit them personally are ethically good for the whole. :shrug: