Via Paul Krugman's blog, I found these comments from Thomas Hoening, the president of the Kansas City Federal Reserve, about why the present course of resolving the financial crisis is clearly wrong. It is too timid, too ad hoc, and too generous with huge capital infusions with few strings attached.
The one area where the public will lose confidence in President Obama fast is with a policy for shoveling endless supplies of money to huge financial institutions that got us in this mess, all the while saying that "government isn't good at running banks."
Saying that is just a variation of the anti-regulatory rhetoric that got us where we are.
Government is not going to "run" banks with temporary nationalization; government is going to take control from failing management and saving what can be saved and shutting down those that can't.
How can it be good policy to keep giving money, time and time over, to the people who have failed, and who seem not to be doing anything with the money except to use it to hide the depth of their failures?
Obama is a smart man; the big question is: can he recognize that he's heading in the wrong direction and change course before it gets really hard to change course?
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