I am hosting a “discussion”:http://firedoglake.com/2009/03/29/fdl-book-salon-welcomes-steven-m-teles-the-rise-of-the-conservative-legal-movement/#comments on Steve Teles’ book on the rise of the conservative legal movement at _FireDogLake._ We will be having a CT Seminar on the book in a couple of months, so if you want to get a flavor of it, drop on by now (or buy the book at “Amazon”:http://www.amazon.com/gp/product/0691122083?ie=UTF8&tag=henryfarrell-20&linkCode=as2&camp=1789&creative=390957&creativeASIN=0691122083 or “Powells”:http://www.powells.com/partner/29956/s?kw=teles%20conservative%20legal%20movement. Also check out Rachel Morris’s “article”:http://www.washingtonmonthly.com/features/2009/0903.morris.html in the _Washington Monthly_ which draws heavily on Steve’s research (and provides a nice summary of it).

Suppose Obama came out and said, roughly:

My fellow Americans, the thing about the Geithner plan is this. Experts disagree about the nature of the crisis. Either it is a liquidity problem or an insolvency problem. That means: either the market values of these so-called toxic assets are depressed because of a kind of market failure; or the market has priced these assets more or less correctly and many institutions holding these assets are, as a result, insolvent. If we are indeed in a liquidity crisis, the Geithner plan should solve it as well as any alternative plan could. If it is an insolvency crisis, however, as many experts believe, the Geithner plan will do nothing – or not nearly enough.

If the Geithner plan fails, we will confront another either/or: either nationalize these too-big-to-fail institutions, at great cost, or allow them to fail, collapsing the global financial system and, very likely, the world economy. This is no true choice, however. Hard as nationalization will be, if it comes to that, the alternative would be far, far worse.

We do not need to take this daunting step of nationalization yet because, first, we’re trying the Geithner plan. What you should know about the Geithner plan is that, if it fails, it will still have been worth trying. We will have determined that the problem is indeed insolvency. We will have clarified the path to be taken, laid to rest any reasonable skepticism about the strict need for nationalization. And we will have paid no more for this knowledge than we would have had to pay in any case. If the government effectively transfers money to distressed financial institutions, under the Geithner plan, and later those institutions have to be nationalized for a time, there is no need to ‘pay twice’. [click to continue…]