Monday, March 23, 2009

The Geither Plan

I've been rather frustrated this weekend with (most of) the liberal commentary on Treasury's plan for the financial sector. It seems even commentators eminently equipped to do so will not separate out whether Timmeh's plan will work from whether it is just. The latter point is not inconsequential, but it is fundamentally unrelated to what one supposes should be economic criticism from our experts. I appreciate that many want to see bankers' heads on pikes, and that they think that nationalization pre-privatization is the best way to achieve that metaphorically... but they've not, in my eyes, made much of a case as to whether it is a superior choice in terms of dollars and cents.

My... tentative (and uniformed!) conclusion is that, if Krugman and Atrios and the like are wrong (not often the case... but still) then this is the cheapest option, both economically and politically. If, ahem, "the shitpile" is as bad as they think it is, then we will have no option but to nationalize and it will be completely obvious to everyone after we try this.

For the very few people who agree with me... see Brad DeLong's excellent FAQ and Kevin Drum's take. If you want to see the three main options compared with a car dealership analogy, check Mark Thoma. If you want the negative views, well, they shouldn't be hard to find... but Krugman is a good place to start.