Friday, March 20, 2009
Does a single independent economist buy the Geithner-Summers-Bernanke approach?
On the left, you have:
- Nobel economist Joseph Stiglitz saying that they have failed to address the structural and regulatory flaws at the heart of the financial crisis that stand in the way of economic recovery, and that they have confused saving the banks with saving the bankers
- Nobel economist Paul Krugman saying their plan to prop up asset prices "isn't going to fly". He also said:
At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached. This was bad analysis, bad policy, and terrible politics. This administration, elected on the promise of change, has already managed, in an astonishingly short time, to create the impression that it’s owned by the wheeler-dealers.
- Prominent economists like Nouriel Roubini, James Galbraith, Robert Kuttner, Dean Baker, Michael Hudson and many others slamming their approach (and Paulson's as well)
On the right, you have:
- Leading monetary economist Anna Schwartz saying that they are fighting the last war and doing it all wrong
- Former Assistant Secretary of the Treasury and former editor of the Wall Street Journal Paul Craig Roberts lambasting their approach
- Economist John Williams saying "the federal government is bankrupt ... If the federal government were a corporation … the president and senior treasury officers would be in federal penitentiary."
- Prominent economist Marc Faber and many others tearing their approach to shreds.
Sure, the economists for the banks and other financial giants which are receiving billions at the government trough think that the Geithner-Summers-Bernanke approach is swell.
And perhaps a couple of economists for investment funds which use their giant interventions into the free market to make some quick money.
But other than them, no one seems to be buying it.