Obama's harshest criticisms are coming from the left

On the left, Hamlet stands over the body of Polonius, whom he has mistakenly slain.

by Leigh Pomeroy

Joseph Stiglitz and Paul Krugman, two Nobel Prize winning economists, were more than happy to see the promise of Obama replace the know-nothing, do-nothing, what-me-worry mentality of the previous administration. Yet today they are two of the Obama-Geithner-Summers financial rescue plan's most vocal critics.

Ultra libertarians like Jim Willie have been warning about the Wall Street meltdown for years. And while Willie's found a niche on the far-out other side of the philosophical-financial spectrum, all three men — Krugman, Stiglitz and Willie — agree that the deviously brilliant but morally lacking scions of Wall Street, being instrumental in creating today's economic mess, are now not only being courted but appeased in the desperate search for solutions.

Of the three, Willie is probably the most straightforward: Buy gold, get rid of the Federal Reserve and lock the Wall Street bastards up.

Stiglitz and Krugman prefer a more European (and perhaps humane) solution: Nationalize the banks and put the Wall Streeters out to pasture.

Willie might argue that even in the pasture they could do harm, and I wouldn't be surprised that Stiglitz and Krugman would agree, arguing they should be carefully monitored at all times.

Of course, the problem is not just Wall Street. There are systemic problems worldwide, of which the U.S. is inarguably in the middle. Yet the U.S. no longer has the control or clout it used to. It is more like a ship in an angry sea created partially by its own making, being steered by helmsmen without proper charts, radar, sonar, climate predictions and other key navigation tools.

Young Obama is doing an admirable job under the circumstances, but while he is intelligent and charming and well educated he cannot possibly know all the nuances of the past on which good decisionmakers rely to predict the best course of action for the future. For that he must trust his advisers. And if those advisers are tainted by the Wall Street mentality, despite their best intentions they may not be capable of steering the best course.

The solution? I am certainly no economist, but the argument for simplicity time and again makes the most sense. For individuals and families that translates to living within one's means. For financial institutions it means minimizing the complexity of business dealings. And this goes for government as well. All other things being equal (and sometimes even unequal), simpler is better. It's more transparent and requires less administration — an incentive-defeating burdensome cost as evidenced by the U.S. healthcare system and taxes.

In Hamlet Polonius said, "Neither a borrower nor a lender be: For loan oft loses both itself and friend." While Polonius was no mental giant, being treated with some disdain by Shakespeare through Hamlet, Wall Street would have done well by following a modicum of his advice. As Stiglitz (among others) has written, "Banks got themselves, and our economy, into trouble by overleveraging — that is, using relatively little capital of their own, they borrowed heavily to buy extremely risky real estate assets."

Polonius is calling from the grave: "I told you so!"