Financial Hocus-Pocus

I would surely love to have one of the economic thinkers I respect say a good word about the new Obama/Summers/Geithner plan. But alas, nary a good word is to be found anywhere. Take Paul Krugman, for example, who is near 'despair':

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

But the real problem with this plan is that it won’t work. Yes, troubled assets may be somewhat undervalued. 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.

You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.
Even more important, however, is the way Mr. Obama is squandering his credibility. If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place.

I would love, dearly love, to have more trust in Obama's judgment on this than Krugmans. But unfortunately, Krugman is Nobel-Prize winning economist, while Obama is relying on Geithner and Summers, and frankly, there is little reason to trust them. He needs to get new economic advisors, who aren't seen as lackeys of Wall Street.