Opinions of Treasury Secretary Geithner's economic plan seem to be split perfectly symmetrically today: The smarty-pants club (all the economists, except this one guy in Australia who uses the term "non-recourse" compulsively) all hate it. The dumb-ass club (a.k.a. the stock market) loves it. (At least for now.)
So what's a non-reflexively negative person of middling intelligence to think? That's where the Downturnaround comes in! Today, we journeyed down the dark and twisting pathways of other people's opinions about the economy, and lo and behold: At the end of the tunnel, we saw a light.
First, let us say that we are put off by the spitfire pundits who find Geithner guilty of either gross, chicken-hearted incompetence or, worse, playing Wall Street's lackey. Here's why we reject that: Because he works for Barack Obama. The president may not have much economics expertise, but he knows a moron when he meets one, and he certainly did not get himself elected in order to screw the American people on behalf of the wealthy. Sure, we have worries and doubts, and any time we see the words "trillion" and "taxpayer" in the same sentence we scream for an intern to bring us our smelling salts. But as this plan solidifies into reality, we find we have more trust in Obama's good judgment than a blogosphere full of pissed-off Monday-morning quarterbacks who each have an idea that would work perfectly if only we'd turn the government over to them.
Second, amid the madness, we found ourselves a new hero. Among the few non-Australian smart people who attempted to understand Geithner's plan, there was Berkeley economist Brad Delong, who posted an FAQ about the plan and then bravely posited that Paul Krugman — who wrote today that "the real problem with this plan is that it won’t work" — might be wrong. Disagreeing with Krugman does not go over well in these circles, and thus Delong's commenters went totally Santelli on his ass. Except for one lone voice, who wrote this note, which he addressed to Krugman:
Recently you have been on the nationalization bandwagon. Frankly, what are you smoking? You nationalize one major bank, I guarantee you there will not be even one major financial institution left standing as private or quasi-private entities. The markets react with cold rationality and will drive each one in turn into the arms of the US government. Now is that showing faith in the American Way? Mr. Bernanke has indicated that he understood this dynamic very well, as does Mr. Geither [sic] and I believe so do Larry Summers and Paul Volcker. But you have turned 'shrill' instead. Why can't you see that freight train coming?
Here is what the Fed should have done (and finally is doing) — tell the Planet, the US Federal Reserve is the bid, You have assets to sell, the Fed is buying, with new printed GREENBACKS. This is BECAUSE the entire planet is betting on political economy of the United States.
Having immigrated here 26 years ago, I am making the same bet (it's been bloody and painful). Not to do so would render my family's decision to send me here for my education as a terrible mistake. That I am unwilling to accept. It is this country which has led the planet in the 20th century, and will do so for the foreseeable future, and that is because it is this country which recognizes the supremacy of the individual over the state, and it is this value coupled with strong property rights that simply has no alternative on Planet Earth. ... All markets in the end depend on confidence of all participants, and finally the Fed is moving to restore it. We wait to see the outcome with baited breath. The Fed is the bid, the world be damned, now that is more like it, the American confidence and swagger is returning and we need more of it.
He signed off as "The Saint." Whoever you are, the Downturnaround would like to buy you a drink.
I Think Paul Krugman Is Wrong [Grasping Reality with Both Hands]