Where's Buffy?

Paul Krugman once again makes the case that it's time to lop off some zombie heads.

Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.

Obama clearly understands that the zombies are a - or the - problem, even if Geithner, Summers, and Bernanke can't seem to face the arithmetic. This could be a first big test for Obama. If Geithner can't bring himself to pull the trigger on the banks, Obama may need to pull the trigger on Summers and him. Tomorrow would be a good day to start with Citi. Later might be too late.

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