Dissent Of The Day

A reader writes:

You're wrong about Geithner. I think he has a pretty basic problem -- the political will to do what needs to be done with the banks doesn't exist.  They can't really move until that accumulates. It's necessary to nationalize the sick institutions.  If we do that, the market will plunge.  The administration doesn't have the strength to do something that will crater the market.  So we're doing this death by a thousand cuts thing.

You're squeamish about nationalization, and I understand why. Everything the critics say about it is true.  The problem is that the sickness in the finance industry is a cancer that's taking the whole economy down, and we have to cut it out.  Cutting it out is dangerous, and it's going to create all sorts of problems, some of which are really serious.  But we have to cut it out.

I have a friend whose father in law just went in for heart bypass surgery.  He's not in good shape, and they weren't sure he'd survive. The surgery was traumatic, and difficult, and hard to come back from, and the guy isn't strong.  But the blockage is even worse, and he had to get rid of it.

Fortunately, he seems to be OK.  But sometimes, you have choices like that.  It's where we're at now with the economy. It's a really bad place. It's hard to take that decision to go in for the surgery that might kill you.  It takes awhile to gather the courage.  That's what we're doing with the banks -- gathering the courage.  The market has to crater, because that's what will produce the resolve to do what has to be done.  No one will brave nationalization until they've been pummeled into submission.

Our leaders aren't dictators.  They're answerable to the markets to some extent, and they can't just impose things. No one was willing to burn down Atlanta at the start of the civil war -- it took people awhile to get there.  Eventually, enough people had died that it became a reasonable thing to do.  Sometimes in a bad crisis, to do what's necessary is so difficult that it takes awhile for it to become thinkable. Don't blame Geithner too much for not wanting to blow up the economy. He's surrounded by land mines. He's smart, he's honest, and he shows no sign of buckling under what must be a lot of pressure.  We're lucky to have him.