The Politics of the Economic Crisis

Paul Krugman, Brad DeLong, Mark Thoma, and Simon Johnson are all pretty much in agreement over the economics of the Geithner Plan, but differ on the politics.

DeLong believes the plan brings in 3/8ths replacement money for the toxic assets on the banks books and believes the administration feels it's bringing in 6/8ths of the money. Krugman doesn't believe it will be enough to turn things around. DeLong doesn't say or doesn't know but feels it's better than nothing.

He thinks the Senate won't go along with a bank reorganization plan at this time, but might later on. Will it be too late? We'll find out.

What we won't know is if brinkmanship with the dead-enders in the Senate over pre-privatization would have worked. Two things stand out for me: 1) the conservative Swedish minister who implemented the Swedish model said bipartisanship and confidence is the key and war in the Senate wouldn't inspire confidence 2) info on the "stress tests" should already be coming in, even though no one is discussing them, so the administration should know the lay of the land.