I think the Obama/Geithner plan for finance is thoroughly wrong-headed, but I remain cautiously optimistic that what we are witnessing is the necessary and painful adjustment of the political process.
One task is preparing the ground for radical reform. The reactionary power must be reduced, or neutralized. And, the progressive power, which is still weak as a new-born babe, must be built up. The secular, rational, moderate Right is, mostly, new to the Democratic Coalition. The Democratic Left, chastened by the horror that was 8 years of Bush, has stifled itself, in the interests of achieving partisan power, power that is in the hands of the Centrists -- and some of the key Centrists in Congress are Republicans and Blue Dog Democrats complicit in the malfeasance of the last decade. Almost by definition of their political outlook, the Centrists can not conceived of radical or genuinely principled action -- they have no idea what to do; split the baby and the bath water is their notion.
Obama is going wrong on the bank bailout. But, the country may be going right, in its own way, and may well get there first. (Congress just voted for a 90% income tax rate!)
It will take some time, and political experience and manuvering, before progressives are ready to take leadership away from centrists. There's a generational change still underway in the Congress. Ted Kennedy and Robert Byrd aren't even dead, yet. The Media is still adjusting to the power shift. Conventional wisdom is out of breath, trying to keep up with all the policy changes flying out of the White House.
Evan Thomas doesn't outline the true, nightmare scenario, which is that Obama manages to patch things together for a brief respite and return to the status quo ante, before it all collapses again (in time for Obama to lose the 2012 election to Mitt Romney and Mike Huckebee!).
The revolution in our political affairs did not end with the 2008 election. It is still evolving rapidly. There is much bloody destruction ahead. Don't forget to duck!
Additional note: Felix Salmon reads the Newsweek article and notices that neither author, Evan Thomas nor editor, Jon Meacham, seemed able to find anyone to praise Krugman, and concludes:
". . . they're fearful that Krugman might be right, and have therefore come up with a list of reasons why it might be reasonable to ignore him.
And this, at heart, is why I think we haven't yet seen the worst of this crisis, neither in terms of the financial markets nor of the broader economy. There's still a sense of denial in the air -- a feeling that if you're going to devote an entire cover story to someone like Krugman, then the story should bend over backwards to showcase people saying that he's wrong, while it need make no such effort to quote anybody saying that he's right.
Or, to put it another way, the question posed by the article isn't whether Krugman is right or wrong -- it's whether he's worth listening to or not. And the answer posed by the article is 'we fear he might be, but we hope he isn't'. The problem -- which the article doesn't mention -- is that the history of this economic crisis to date is a history of fear being right and hope being wrong."
Hope may be audacious as all get out, but it still makes a lousy plan.
Another additional note:
Media Matters - Krugman and Newsweek:
"During the Bush years, Krugman, from his same perch on the pages of Times' opinion pages, waged about as vocal a campaign as humanly possible to warn readers and the country about what he considered to be the perilous policy decisions the Bush administration was embracing, and what the disastrous results for America would be.
Looking back on the Bush years, Krugman's track record was rather impeccable. But you'll note he didn't appear on the cover of Newsweek back then. (No 'Bush is Wrong' cover lines.) And for years Krugman only occasionally appeared on the pundit talk shows. He wasn't referenced much inside The Village, either. Meaning, the Beltway press pros didn't seem to care what Krugman wrote about Bush and didn't think his writing--his opposition--needed to be examined closer. He was just a liberal critic, so who cared what he wrote about Bush. (That's my take on how much of the press viewed Krugman.)
"But now a Democrat is in the Oval Office, Krugman is still hitting the president from the left, and suddenly the Beltway press thinks Krugman's work is fascinating and newsworthy. Trust us, it is. (For years he's been our pick as the country's premier columnist.) We just think everyone would have been better off if the press had paid this much attention to Krugman's work between, say, 2002 and 2006.