Monday, March 23, 2009

DeLong defending Geithner's plan

To everyone despairing with the Administration's response to the financial crisis, DeLong to the rescue. DeLong, who my favourite undergrad econ prof encouraged us to read, is a reasonable and intelligent economist, though definitely left-leaning. His Purpose right now I'd say is to serve as a counterpoint to Krugman who is throwing all liberals into despair.

Q: What is the Geithner Plan?
A: The Geithner Plan is a trillion-dollar operation by which the U.S. acts as the world's largest hedge fund investor, committing its money to funds to buy up risky and distressed but probably fundamentally undervalued assets and, as patient capital, holding them either until maturity or until markets recover so that risk discounts are normal and it can sell them off--in either case at an immense profit.

Feel better now?

Update: Woops, just noticed Krugman himself linked to DeLong's Q&A.

1 comment:

  1. This is actually sort of comforting. Krugman's blog is often my main source of economics opinion and he seems to be pretty sure that the plan is going to fall flat (with what consequence?). I noticed that he links to DeLong a lot, but I didn't realize DeLong views the Geithner plan favorably. Good to know.