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Wall Street responded favorably Monday to the Obama administration’s bank bailout plan, but columnist Paul Krugman did not. “Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing,” Krugman complained. He argues that rather than the government buying up toxic assets, it should follow the time-honored method for dealing with the aftermath of widespread financial failure: “The government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.”
Krugman wrote: “That’s what Sweden did in the early 1990s. It’s also what we ourselves did after the savings and loan debacle of the Reagan years. And there’s no reason we can’t do the same thing now.”
Alaska Gov. Sarah Palin announced last week that she would accept only 69 percent of the estimated $930 million in federal stimulus money slated for her state. She said she objects to federal strings on some of the money. But some critics accused Palin of trying to keep up with other Republican governors who may run for president in 2012 and are also turning down some of the money. “It is very clear that the governor is doing this just to further her own narrow political national agenda and ambitions,” said Patti Higgins, chairwoman of the Alaska Democratic Party. Republican Senate President Gary Stevens suggested that Palin was getting publicity for refusing some money while knowing that the Alaska State Legislature likely would override her and accept the money. Democrat Bob Poe noted the irony of the opposition to the stimulus, given that “federal spending represents about one-third of Alaska’s economy each year.”
Meanwhile, South Carolina Gov. Mark Sanford explained in a Wall Street Journal commentary why he wants to use $700 million of the about $2.7 billion going to South Carolina to pay down state debt.
“We’re in a once-a-century financial crisis, and yet we’ve actually descended into politics worse than usual,” columnist Thomas Friedman wrote. “There don’t seem to be any adults at the top — nobody acting larger than the moment, nobody being impelled by anything deeper than the last news cycle. Instead, Congress is slapping together punitive tax laws overnight like some Banana Republic, our president is getting in trouble cracking jokes on Jay Leno comparing his bowling skills to a Special Olympian, and the opposition party is behaving as if its only priority is to deflate President Obama’s popularity.
“I saw Eric Cantor, a Republican House leader, on CNBC the other day, and the entire interview consisted of him trying to exploit the AIG situation for partisan gain without one constructive thought. I just kept staring at him and thinking: Do you not have kids? Do you not have a pension that you’re worried about? Do you live in some gated community where all the banks will be OK, even if our biggest banks go under? Do you think your party automatically wins if the country loses? What are you thinking?”
© 2009 Wichita Eagle & Beacon Publishing Co. All rights reserved.