More on Geithner's plan

Geithner explains his plan in today's WSJ.

Krugman doesn't like it. Paraphrased: Nationalize the banks! Stop trying to prop up a broken system.

Rabble on the right cries socialism etc. Paraphrased: Lay off on all this government action and risking taxpayer dollars--this plan is doomed to failure. But if the economy doesn't get fixed, it will be YOUR FAULT.

My rule of thumb when both sides of the political spectrum condemn a plan like this is to consider one of two possibilities: either it's grossly misguided centrism that will suck, or it's the best we can hope for.

In this case I'm leaning towards "the best we can hope for". Think about Geithner and Obama's positions for a moment. Nobody in the world has more incentive than these two men to get this right. Their reputation and tenures depend on this plan succeeding. And they're both very smart at what they do. And the problem is huge.

So to pretend that this is incompetent amateur hour or neosocialism (as the right does), or that Obama and Geithner are becoming stooges for Wall Street (as the left does) strikes me as a bunch of nonsense.

Krugman would prefer we experiment with the Swedish model. I'm an Austrian School libertarian who is unsure to do (who is?) but very skeptical of any government intervention. It would be nice to spin off two parallel universe and compare the results of the three approaches, but we can't do that. Pragmatically, Geithner's technocratic public-private partnerships are the only viable option. How well they'll work nobody knows, but I think we can rest assured that the Obama administration will do its darndest to make the plan work.

Update: So far investors like it and there's some fragile optimism. I empathize.