Wednesday, March 25, 2009

Krugman on PBS's News Hour

The following video is a discussion of the Geithner plan for toxic assets. Krugman continues to hold his interpretation that this fails to address the real problem: that Geithner is trying to use financial engineering to solve a "liquidity problem" (people are scared and you need to give them confidence) when in fact the problem is much worse, it is a "solvency problem" (the banks are bankrupt and in a hole too deep to crawl out of).

Part 1:


Part 2:


Notice how Krugman points out the dark side of this Geithner maneuver: it creates windfall profits for some and quietly passes huge costs on to taxpayers.

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