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.”