The Economy–Krugman Again, Denial, and Nobody Left

Krugman Again: “Krugman: Geithner Plan Certain to Fail” is the title of a Newsmax.com piece. It concerns an apparent growing disappointment by Nobel-prize winning economist Paul Krugman with the Obama administration’s developing economic policy. Here‘s some it:

• “This is more than disappointing,” Krugman wrote in the New York Times. “In fact it fills me me with with a sense of despair.”
• “The Geithner scheme would offer a one-way bet: if asset values go up, the investors profit, but if they go down, the investors can walk away from their debt,”
• “This isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets,”
• “But the fact is that financial executives literally bet their banks on the belief that there was no housing bubble, and the related belief that unprecedented levels of household debt were no problem. They lost that bet. And no amount of financial hocus-pocus — for that is what the Geithner plan amounts to — will change that fact.”

Denial: “ Full Commanding Denial” is Jim Kunstler’s Monday post for 3/23/09 at www.Kunstler.com (‘My Weekly Blog’ section).

Like Professor Krugman in the above comments, Jim Kunstler is/was a supporter of President Obama but now seems to be having some trouble with his economic policy. Here are some of Jim Kunstler’s views:

“…he also appears to be in full commanding denial of the realities overtaking our American experience.

These realities include the fact that we can’t possibly return to the easy credit and no money down “consumer” economy no matter how many nominal dollars get shoveled into the fiery furnace of banks too-big-to-fail.”

• “Everything that we’re doing right now is engineered to avoid reality, to sustain the unsustainable, to recover the unrecoverable, when the mandate of reality compels us to face our losses in order to move on to the next chapter of a collective American life.”
• “I think , he is going along, for the moment, with a consensus of wishes to prop up life as we know it at all costs.”

Note: Jim Kunstler is a noted author, fiction (“World Made By Hand”) and non-fiction (“The Long Emergency”), who concerns himself with our worlds resources and the human responses to their depletion.

Nobody Left: “Soon there may be nobody left to lend to America” is the Irwin Stelzer piece written for the Times On Line (busibess.timesonline.co.uk) this last Sunday, 3/22/09.

The response to the latest phase of the Obama administration’s economic policy got this response from America’s largest creditor, “…Chinese premier Wen Jiabao said he was a “little bit worried” that America might cheapen it’s currency and pay back the $1.2 trillion it owes in depreciated dollars.”

Also noted in the article was a Wall Street Journal report “…that it now costs seven times as much to buy insurance against an American government default as it did only a year ago.”

The economy, national and international, is something most of us have little control over but we, as individuals and families, do have some control over how we respond to economic conditions. At our next post, the middle of the week, we’ll be discussing how some families and individuals are responding to these challenging economic times.

Until then, keep your eyes on the horizon as the weathers changing fast.