DeLong Assesses Obama

Here is an assessment of the Obama administration's handling of the crisis by Brad DeLong:

Back last November, I said that the Obama administration needed to do five things:

1. Expansionary monetary policy at an appropriate scale.
2. Expansionary fiscal policy at an appropriate scale.
3. Massive bank recapitalization--or nationalization--so that banks believe that they can be banks that start lending again rather than being zombies that think they have to hunker down and minimize risk in order to keep the next negative shock from destroying the institution.
4. Massive buy-ups of mortgages by Fannie and Freddie so that (a) mortgage deals could be reworked, and (b) the supply of risky assets on financial markets that the private sector could be reduced in consonance with the banking system's reduced risk tolerance.
5. Design the regulatory system for financial markets going forward.

Bernanke has done (1). Summers and company have done (2) at perhaps half-scale--but thanks to the Republicans and Senator Nelson that was the biggest fiscal boost progrtam that could get through congress. Geithner and his skeleton staff are doing about half of (3)--or perhaps less. And I see no signs of (4) or (5).

This is much, much better than the Bush administration. But it is not reassuring. We might still get out of this "OK," where "OK" means a headline unemployment rate that stays below 10%. But we might not...

This isn't good enough. The US economy continues to plunge into an abyss while government diddles. Not good.