When Krugman says “it’s a shame” what he means, I think, is something like “it would have been nice if the alternative to the Paulson plan was called the Obama plan” or some such thing. But I don’t think it means “Obama should feel great shame for doing something terribly wrong.” In the context of the article, whatever personal dislike he may have toward Obama, it’s pretty obvious what Krugman is arguing: Obama is the responsible choice for President; McCain a terrible and awful choice.

I agree that Obama has played this with poise and level-headed-ness. And I think that by staying at arms length, it’s helped minimize the amount of presidential politics injected into the debate. An injection which we saw could be pretty destructive!

“About Mr. Obama: it’s a shame that he didn’t show more leadership in the debate over the bailout bill, choosing instead to leave the issue in the hands of Congressional Democrats, especially Chris Dodd and Barney Frank. But both Mr. Obama and the Congressional Democrats are surrounded by very knowledgeable, clear-headed advisers, with experienced crisis managers like Paul Volcker and Robert Rubin always close at hand.”

This is the second time I’ve heard Krugman criticize Obama’s handling of the economic crisis. I would very much like to know what Krugman is talking about. Why, exactly, would it have been helpful for Obama to inject presidential politics into this issue by taking a strong position on the campaign trail while his Democratic colleagues in Washington were working hard to garner support from Republicans in the House and Senate? Does Krugman honestly believe Obama could have made an important difference?

I suspect not. If Krugman had a substantive point to make, I suspect he’d explain himself more fully — if only for the sake of clarity. I suspect one of two things: Either Krugman is criticizing Obama for no other reason than to make his criticisms of McCain seem more credible (just like Freidman), or Krugman is simply trying to take Obama down a few notches because he has a personal grudge against Obama for some reason.

Would anyone like to take issue with my analysis by speculating as to what Krugman meant when he wrote it was a “shame” that Obama didn’t “show more leadership”?

For my part, I think Obama was absolutely right to let Frank and Dodd take the lead on this issue.

And to (attempt) to be fair to Paulson, it’s my understanding that they have essentially enacted his plan but with proper over-sight and limiting pay for Wall Street Execs:
http://www.nytimes.com/2008/09/29/business/29bailout.html?pagewanted=all

With that said, it is precisely “the magnitude of the situation we’re facing”, that makes Krugman’s criticism of Paulson appropriate and necessary, not “juvenile”. In an effort to get away from invocations of him, I’d like to offer another well-known lawyer, writer, actor and economist, who also happens to be a Republican, who was similarly appalled by the ‘Paulson clause’ granting total authority over the bail-out’s execution:
http://www.nytimes.com/2008/09/28/business/28every.html

From the article:

The people whose conduct got us into this catastrophe have not only taken our money, hopes and peace of mind, but they apparently also want a trillion or so more dollars to put into their Wall Street Buddy System Fund. This may be the most dangerous attack on the law in my lifetime. What anarchists even dared consider this plan? Thank heaven that minds more devoted to the Constitution on Capitol Hill are questioning this shocking request.

[emphasis mine]

By the way, if we are actually thinking about tossing the Constitution out the window, why not simply annul these credit-default swap contracts? With that done, the incomprehensibly large liability of the banks would cease, and we wouldn’t need this staggering bailout. Shouldn’t we consider making the speculators pay some of the price?

So, I stand by my choice to include my voice in the national chorus of criticism of Paulson for deigning to include that heinous clause. Furthermore, at least in my book, Paulson doesn’t get points for ‘conceding the oversight question’. To me, he utterly disqualifies himself from the process entirely, for having dared such a faux-legit and egregious power grab.

But officials said the core of the proposal, put forward a week ago by Treasury Secretary Henry M. Paulson Jr. remained intact: a plan for the government to purchase up to $700 billion in troubled assets from financial firms as a way to free their balance sheets of bad debts and to help restore a healthy flow of credit through the economy.

Click here for the article: http://www.nytimes.com/2008/09/28/business/28bailout.html?_r=1&hp&oref=slogin

Is this plan “absolutely insane”? If you agree that this plan is “absolutely insane,” then I assume you would strongly urge Congress to vote against the plan.

I am strongly urging Congress to vote FOR the plan.

So is that where you and I disagree? Or are you willing to concede that your “absolutely insane” characterization was a bit premature?

Regarding the no-oversight aspect of the plan, Paulson has completely conceded the need for oversight. So continuing to beat Paulson up over the particular point is utterly beside the point — and that’s what Krugman was doing.

To say that he has been “more than reasonable” is just crazy to me. Do you agree with Krugman that there is no reason to trust Paulson about anything related to this bailout plan? If you think Krugman has been “more than reasonable,” then I assume you agree that everything Paulson says and does should be utterly disregarded — because that’s the message Krugman’s fans will take away from that blog post I cited above.

Moreover, Paulson was asking the taxpayer to trust him that the mortgage-backed assets he would buy would later gain value and that the government would make a profit. I think it’s reasonable to interrogate both the plan and the assumptions.

As one economist said recently “the grown-up thing is to do something to rescue the financial system.” That economist was Paul Krugman, of course. Did Krugman push the debate in the right direction? Only if you think people read and are influenced by the New York Times. I do, but maybe I’m wrong. Then again, I don’t ascribe any great powers to Krugman. I just happen to think he’s right and has been more than reasonable.