Scary Deja Vu...

I seem to be alone in my social circle for reading lots about the economy, even before this current recession started over a year ago. None of them seem to talk about it much. The orthodontists mention slower business, but none of them seem to follow current events, like the evolution (and devolution) of the stimulus package in front of the Senate right now.

Yesterday, Obama announced a salary cap of $500,000 for select executives in firms receiving federal bailout money from TARP. Good. The whole thing is fucked, and it's becoming more so.

While Paul Krugman is still my favorite to read, in part because he often has specific policy prescriptions as well as critique, Ryan at The Bellows and, to a lesser extent, Dean Baker do a pretty good job describing my concerns, and venting my frustration, and more frequently, too. And everyday Mark Thoma seems to point me at something interesting enough to keep me from unsubscribing from his RSS feed.

Tim Duy (via Economist's View):

I have run the gamut from dismay to anger to my current emotion, supreme disappointment. There were really only two glimmers of hope that the US could avoid a Japan-like multi-year stagnation. One was the offsetting effect of a strong global economy. Of course, we all know how that story ended. Poorly. The other was my certainty that US policymakers like NEC head Lawrence Summers and Treasury Secretary Timothy Geithner had studied the Japanese crisis up and down and realized that you needed to meet a banking crisis head-on, not with halfway measures that left the system crippled.

But today, reading CNBC’s coverage of the plan, it becomes painfully clear that we are headed full speed on a policy bullet train designed to repeat Japan’s errors.

........

Classic. Absolutely classic. Is this really addressing the problem of pricing? Are we not in the same boat of “if we pay too little, the bank is undercapitalized, but if we pay too much, the taxpayer holds the bag and therefore we need to nationalize”? Obviously we are in the same boat, because the new plan may cause an “accounting problem.” Like insolvency. That is, in fact, a problem, no argument from me. Apparently, though, the Administration’s solution is a suspension of accounting rules. Translation – we are going to try to hide the problem.

As if investors won’t see through that mirage because all of you traders are clearly slow witted. Again, Bank of America already plumbing the depths…

Why are we here? Why, months after TARP, are we still not willing to dig down in the balance sheets of troubled banks and disgorge the questionable assets once and for all? Why, with a new Administration, supposedly unfettered from the ideological positions of the last Administration?

The whole thing is definitely worth reading. One more reason I've been disenchanted with Obama (and his party) since before he was sworn in.

Look, the banks which way, way, WAY, overleveraged themselves need to be nationalized. They're already bankrupt, they just haven't admitted it yet. That's what happened with the S&L crisis here in the US, and it's what Sweden did as well. There are all these real-world recent history examples that no one in charge is paying attention to. It's just fucking us all over, and it's bad politics, to boot. If this recession drags on significantly, the party in power is gonna get reamed but good even by the idiot obstructionist party currently in opposition.

Feh.