Barackonomics

Sen. Barack Obama gave a major speech on Thursday that placed blame for the current economic slowdown squarely on deregulation of the financial sector. The speech drew a negative reaction from New York Times columnist Paul Krugman, who called his policy prescriptions "cautious and relatively orthodox." No matter that the differences between Obama and Sen. Hillary Clinton are almost undetectable to the unaided eye. They've both endorsed the Dodd-Frank bill in Congress that would begin re-regulating the banking sector and lend a helping hand to troubled homeowners facing foreclosure.

More significantly, they would both go farther than Sen. John McCain, the Republican's presumptive nominee, or the Bush administration, which on Monday will unveil its own plan for increased oversight of the investment banking firms that brought us the mortgage crisis. As the Times story that will appear Saturday reports:

While the (Bush) plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation. The plan would not rein in practices that have been implicated in the housing and mortgage meltdown, like packaging risky subprime loans into securities carrying the highest ratings.

For some interesting take's on the Obama's Cooper Union speech, check out American Prospect and Boston Globe columnist Robert Kuttner, who likened him to FDR in his ability to turn a crisis into a "teachable moment":

He connected all the dots -- between the complete dismantling of financial regulation, the declining economic opportunity and security for ordinary people, the current financial meltdown, and the political influence of Wall Street as the driver of these changes. Astounding! I wish I had written the speech. It is this kind of leadership and truth-telling that is the predicate for the shift in public opinion required to produce legislative change. A radical, appropriately nuanced, and deeply public-minded description of what has occurred, the speech was Roosevelt quality: the president as teacher-in-chief. Those who felt that Obama was capable of real growth that will transcend the campaign's early and somewhat feeble domestic policy proposals should feel vindicated.

Economic Policy Institute economist Jared Bernstein has an excellent overview of the details of Obama's proposal and the other candidates' plans here.