Opinionated Raconteur

An interesting observation: on a day that the S&P 500 jumped 7% on word of Geithner’s newest plan to deliver us from economic catastrophe, many intelligent commentators remain convinced that this plan will fail.

Who is correct?

Well, making inferences from one day’s trading is as foolish as it is stupid; on the other hand, the detractors are far from stupid.

In fairness, here is a pro-Geithner FAQ from Brad DeLong that is well worth reading.

Update: another critique of the plan:

n any case, our top political leadership needs to really sell some version of the following message. We let the banks get out of control and the cost will be enormous; our debt/GDP ratio will in all likelihood rise from around 40% to over 80%. We cannot afford to have the same problem again. We must break the power of banks before they break us all. And if you don’t think banks can do that much damage to economies, just look around outside the United States – the world is full of countries where growth is slowed or distorted by a financial system that becomes too powerful. This is not about tweaking the existing U.S. regulatory system; it is about complete change and – in many senses – turning back the clock to a financial system that was simpler, smaller, and much less dangerous.

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