One of the predictions I forgot to make for 2009 is one of a media bailout: some sort of Government intervention in the media industry as it plummets into the abyss. I'm probably glad I didn't make it; while there will be a chorus for Government assistance in media this year, no one really knows whether the Obama Administration will be favorable to the calls or not. . . read more

After reviewing the contents of this Citibank-friendly new law called the Financial Modernization Act, I asked him: "Do you think the big banks have too much power"?

He paused for a few seconds and replied: "Not Yet." Intrigued by his two word answer, I noted the rejection of modest pro-consumer provisions, adding that now that the banks had had their round, wasn't it time for the consumers to have their own round soon?

He allowed that such an expectation was not unreasonable and that he was willing to meet with some seasoned consumer advocates and go over such an agenda. We sent him an agenda, and met with Mr. Summers and his staff. Unfortunately, neither his boss, Bill Clinton, nor the Congress were in any mood to revisit this heavily lobbied federal deregulation law and reconsider the blocked consumer rights.

The rest is unfolding, tragic history. The law abolished the Glass-Steagall Act which separated commercial banking from investment banking. This opened the floodgates for unwise mergers, acquisitions and other unregulated risky financial instruments. Laced with limitless greed, casino capitalism ran wild, tanking economies here and abroad.

One champion of this market fundamentalism was Alan Greenspan, then chairman of the Federal Reserve. Last October before a House Committee, Greenspan admitted he was mistaken and expressed astonishment at how corporations could not even safeguard their own self-interest from going over steep speculative cliffs.

Greenspan and Summers were deemed "brilliant" by the press and most of Congress. Summers' predecessor at Treasury, Robert Rubin, was also a charter member of the Oracles--those larger-than-life men who just knew that the unfettered market and giant financial conglomerates would be the one-stop shopping mart consumers were assumed to be craving.

Now the world knows that these men belong to the "oops oligarchy" that bails itself out while it lets the companies collapse into the handcuffed arms of Uncle Sam and bridled taxpayers who have to pay for unconditional megabailouts. Instead of the Wall Street crooks being convicted and imprisoned, they have fled the jurisdiction with their self-determined compensation. Corporate crime pays, while pensions and mutual fund savings evaporate.

Now comes the next stage of the Washington rescue effort in a variety of stimulus packages which every vendor group imaginable wants a piece of these days. When trillions are offered, many come running.

As the public focus is on how much, when and where all this money should be spent, there are very serious consequences to be foreseen and forestalled. First, consider how much more concentrated corporate power is occurring. Forced or willing mergers, acquisitions and panic takeovers of big banks by bigger banks along with bankruptcies of companies further reduce what is left of quality competition for consumer benefit.

Remember the anti-trust laws. Obama needs to be their champion. The fallout from the Wall Street binge is likely to lead to a country run by an even smaller handful of monopolistic global goliaths.

In the stampede for stimulus legislation, there is a foreboding feeling on Capitol Hill that there is no proposal on the table to pay for it other than by the children and grandchildren. Just the opposite is raining down on them. Everybody including the private equity gamblers, Las Vegas casinos and Hollywood studios along with the banks and auto companies are looking for tax breaks.

So with the economy deteriorating and taxes being cut, where is the enormous money coming from? From borrowing and from printing money. So look out for big time inflation and decline in the dollar?s value vis-à-vis other currencies.

In all the hundreds of pages of stimulus bills, there is nothing that would facilitate the banding together of consumers and investors into strong advocacy groups. We have long proposed Financial Consumer Associations, privately and voluntarily funded through inserts in the monthly statements of financial firms.

If this bailout-stimulus-Wall Street funny money waste, fraud and abuse sounds confusing, that is because it is. A brand new paperback "Why Wall Street Can't Be Fixed and How to Replace It: Agenda For a New Economy" by long-time corporate critic, David C. Korten will explain some of the wheeling and dealing.

You don't have to agree with all or many of Korten?s nostrums. Just read Part II: the Case For Eliminating Wall Street. He considers three central questions:

First, do Wall Street Institutions do anything so vital for the national interest that they justify trillions of dollars to save them from the consequences of their own excess?

Second, is it possible that the whole Wall Street edifice is built on an illusion of phantom wealth that carries deadly economic, social, and environmental consequences for the larger society?

Third, are there other ways to provide needed financial services with greater results and at lesser cost?

Ralph Nader is an American attorney, author, lecturer, political activist, and perennial candidate for presidency as an independent candidate. . . read more

It's certainly true that U.S. Treasury Secretary Henry Paulson doesn't look much like the traditional depiction of Santa Claus.  However, in 2008 America he is playing that role with a vengeance which will undoubtedly affect and afflict all of us for decades to come.  Indeed, Santa Henry's trillion-dollar giveaway to those who caused much of the present financial crisis is already arriving.  While it may seem paradoxical, not to mention inappropriate, to reward those who got us into the present economic mess, Santa Henry is loyal to his former Wall Street colleagues, investment bankers, and other assorted cronies.  They are Santa Henry's Elves, in a manner of speaking. . . read more

O.K., I'll bite - although as I'll explain shortly, the "jump-start" metaphor is part of the problem.

First, Mr. Obama should scrap his proposal for $150 billion in business tax cuts, which would do little to help the economy. Ideally he'd scrap the proposed $150 billion payroll tax cut as well, though I'm aware that it was a campaign promise.

Money not squandered on ineffective tax cuts could be used to provide further relief to Americans in distress - enhanced unemployment benefits, expanded Medicaid and more. And why not get an early start on the insurance subsidies - probably running at $100 billion or more per year - that will be essential if we're going to achieve universal health care?

Mainly, though, Mr. Obama needs to make his plan bigger. To see why, consider a new report from his own economic team.

On Saturday, Christina Romer, the future head of the Council of Economic Advisers, and Jared Bernstein, who will be the vice president's chief economist, released estimates of what the Obama economic plan would accomplish. Their report is reasonable and intellectually honest, which is a welcome change from the fuzzy math of the last eight years.

But the report also makes it clear that the plan falls well short of what the economy needs.

According to Ms. Romer and Mr. Bernstein, the Obama plan would have its maximum impact in the fourth quarter of 2010. Without the plan, they project, the unemployment rate in that quarter would be a disastrous 8.8 percent. Yet even with the plan, unemployment would be 7 percent - roughly as high as it is now.

After 2010, the report says, the effects of the economic plan would rapidly fade away. The job of promoting full recovery would, however, remain undone: the unemployment rate would still be a painful 6.3 percent in the last quarter of 2011.

Now, economic forecasting is an inexact science, to say the least, and things could turn out better than the report predicts. But they could also turn out worse. The report itself acknowledges that "some private forecasters anticipate unemployment rates as high as 11 percent in the absence of action." And I'm with Lawrence Summers, another member of the Obama economic team, who recently declared, "In this crisis, doing too little poses a greater threat than doing too much." Unfortunately, that principle isn't reflected in the current plan.

So how can Mr. Obama do more? By including a lot more public investment in his plan - which will be possible if he takes a longer view.

The Romer-Bernstein report acknowledges that "a dollar of infrastructure spending is more effective in creating jobs than a dollar of tax cuts." It argues, however, that "there is a limit on how much government investment can be carried out efficiently in a short time frame." But why does the time frame have to be short?

As far as I can tell, Mr. Obama's planners have focused on investment projects that will deliver their main jobs boost over the next two years. But since unemployment is likely to remain high well beyond that two-year window, the plan should also include longer-term investment projects.

And bear in mind that even a project that delivers its main punch in, say, 2011 can provide significant economic support in earlier years. If Mr. Obama drops the "jump-start" metaphor, if he accepts the reality that we need a multi-year program rather than a short burst of activity, he can create a lot more jobs through government investment, even in the near term.

Still, shouldn't Mr. Obama wait for proof that a bigger, longer-term plan is needed? No. Right now the investment portion of the Obama plan is limited by a shortage of "shovel ready" projects, projects ready to go on short notice. A lot more investment can be under way by late 2010 or 2011 if Mr. Obama gives the go-ahead now - but if he waits too long before deciding, that window of opportunity will be gone.

One more thing: even with the Obama plan, the Romer-Bernstein report predicts an average unemployment rate of 7.3 percent over the next three years. That's a scary number, big enough to pose a real risk that the U.S. economy will get stuck in a Japan-type deflationary trap.

So my advice to the Obama team is to scrap the business tax cuts, and, more important, to deal with the threat of doing too little by doing more. And the way to do more is to stop talking about jump-starts and look more broadly at the possibilities for government investment.

Mr. Krugman is the author or editor of 20 books and more than 200 papers in professional journals and edited volumes. His professional reputation rests largely on work in international trade and finance; he is one of the founders of the "new trade theory," a major rethinking of the theory of international trade. . . read more