I have been a big supporter of Obama since early on. I worked for him in the primary election. He is ethcal and smart. A constitutional law scholar.
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But unfortunately one thing his background lacks is a good foundation in economics. This is really a pity, because of the dire straights that the large banks have gotten themselves into by making one bad decision after another for many years.
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Obama should set up a secret and private group of economic advisers who advise him directly, not through Geitner or any of his staff. No official minutes, no press conferences, just sound "kitchen cabinet" advice. The people in this blue ribbon group should be George Soros, Paul Krugman, and Michael Moore.
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The correct solution to the big bank insolvency problem is for the federal government to take these big banks over, just like the FDIC does all the time when smaller banks gamble and make really bad decisions (and bets), and then go insolvent. But Obama and his economics team apparently don't have big enough balls to allow that to happen with the bigger banks. I hesitate to call this deficiency a strength of character issue. Maybe it is just an ignorance issue.
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The following article by the Nobel prize winning economist Paul Krugman in the NY Times describes the situation very clearly:
LINK: http://krugman.blogs.nytimes.com/2009/03/21/more-on-the-bank-plan/
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