Barack Obama has repeatedly said that bold action is needed to save the financial system, and he’s probably right, writes Paul Krugman in the New York Times. So it’s a shame he isn’t taking any. “The reality is that when it comes to dealing with the banks, the Obama administration is dithering,” constantly floating out new versions of the same unworkable plan, the Nobel-laureate writes.
These plans are invariably panned, because they all have the same flawed goal: to pump up the price of toxic assets and hope for the best. That’s an unrealistic plan that would cost trillions without saving the system. “I fear that officials still aren’t willing to face the facts,” Krugman says. “It’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over.” That would be bold action—too bold, apparently, for Obama.