It would appear that Brad Delong is the only prominent independent “liberal” economist (that is not on the Obama bank role) that is willing to shill for the Geithner-Obama cash for trash program. All the liberal Nobel (in memorial) Laureates have lined up against the plan not to mention Robert Reich and Jeff, Mea Maxima Culpa, Sachs.
Apparently the fact that Geithner has never won a multi-million dollar bonus is sufficient proof for Delong that little Timmy is no tool of Wall Street. Well neither has Obama, but both men are surely acting as though they are the tools of Wall Street (click the Reich and Sachs links above). Indeed, it is the overwhelming opinion that it is not just the Obama administration but that much of the senate and congress is also under regulatory capture by Wall Street:
Brad is quoted in the FT as saying:
“We have to ask ourselves: Do we want to revive our economy, or do we want to punish the bankers?” says Mr DeLong. “I don’t agree that we can do both.”
Sure you can Brad it is called nationalization. And if you and much of the congress and senate were not so captivated by your ideology (and their self-interest) the banks would have been nationalized, the bankers and their shareholders wiped-out and thereby punished, and the tax-payers’ would eventually have some nice banks on their collective balance sheets which they could later sell back to the investment community.
When the most simple, most elegant and most effective policy is not being pursued it begs the question of why not?
And only three answers seem plausible: it is vested interests, ideology, or both.