Krugman in 'Despair' Over Toxic Asset Plan
Dressing up Paulson's failed solution is no solution at all
By Clay Dillow,  Newser Staff
Posted Mar 23, 2009 8:57 AM CDT
Paul Krugman of Princeton University, winner of the Nobel Prize in Economics for 2008, despairs over the state of the Obama camp's newest financial fix.   (AP Photo/Fredrik Persson, Scanpix Sweden)
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(Newser) – Paul Krugman has been downbeat for weeks on the Obama efforts to rescue the economy, but today he hits a new low. “This is more than disappointing. In fact, it fills me with a sense of despair,” writes Krugman in the New York Times of the White House public-private plan to buy toxic assets from banks. “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."

Krugman finds the plan eerily similar to one floated by Henry Paulson 6 months ago, flawed assumptions and all. It marks the third time Treasury Secretary Geithner has rehashed Paulson’s plan, adding superficial details and calling it a new solution, Krugman says. “This is starting to look obsessive.” Worse, he says, the plan simply won’t work. “It’s just an indirect, disguised way to subsidize purchases of bad assets.”