Optimism Over Despair

By Steven Pearlstein
WashPost
Tuesday, March 24, 2009

It fills me with a sense of despair that Paul Krugman is now "filled with a sense of despair."

Even before the Treasury Department released details of its plan to buy up unwanted bank assets, the Nobel Prize-winning economist was writing in his New York Times column that the plan was certain to fail -- and that this failure would inevitably drag the entire world into a long and painful depression.

Krugman despairs that Tim Geithner, Larry Summers and Ben Bernanke are really nothing more than warmed-over Hank Paulson, so blinded by their free-market ideology that they refuse to consider the only viable option, which is to nationalize all the big banks.

The columnist also despairs that Barack Obama and Rahm Emanuel and David Axelrod don't really understand the political calculus they now face, which is that the near-certain failure of the Treasury plan will deplete the president's stock of political capital and render him powerless when he finally comes around to proposing nationalization.

Gee, and I was feeling rather encouraged by yesterday's developments.

(More here.)