Frank Rich writes that an inability to manage populist anger could undermine everything Barack Obama hopes to accomplish. I agree. But in the process, he writes some stupid stuff that’s likely to encourage more populist anger. To wit:

Bob Schieffer of CBS asked Summers the simple question that has haunted the American public since the bailouts began last fall: “Do you know, Dr. Summers, what the banks have done with all of this money that has been funneled to them through these bailouts?” What followed was a monologue of evasion that, translated into English, amounted to: Not really, but you little folk needn’t worry about it.

Yet even as Summers spoke, A.I.G. was belatedly confirming what he would not. It has, in essence, been laundering its $170 billion in taxpayers’ money by paying off its reckless partners in gambling and greed, from Goldman Sachs and Citigroup on Wall Street to Société Générale and Deutsche Bank abroad.

Rich apparently doesn’t understand that this was the entire point of bailing out AIG in the first place. The thought was that if AIG failed to fulfill its contracts with its counterparties, the entire financial system would probably collapse. So we bought the company and gave them a bunch of money so that they didn’t default on their obligations. That money was never for AIG, it was for paying off AIG’s claims.

I agree with Rich’s larger point, though. It’s up the government to explain in as much detail as possible what it’s doing, who benefits, and why it’s going to work. The fact that a New York Times columnist doesn’t know what the AIG bailout was fundamentally about illustrates that they’re failing at that.

One line I see repeated a lot lately by Obama detractors is that he’s causing the stock market to tank by talking about economic catastrophe and talking about the tough times ahead. These people apparently miss the Bush days when our President’s outward stance was that he was oblivious to the real world we all live in, steadily projecting optimism in such a way that made him look detached and clueless.

In recent weeks we’ve learned that Japan’s economy is shrinking rapidly. AIG is going to report a $60 billion loss on Monday and will have to get more government loans or file for bankruptcy. California home prices are down to 2002 levels and falling.

Nassim Taleb says the current financial crisis is worse than the 1930s. George Soros says we’re nowhere near the bottom. Nouriel Roubini says the same. Alan Greenspan says we need to nationalize banks.

Given the amount of legitimate bad news that we’re seeing every day, I find it difficult to believe that investors are discouraged by President Obama. I think the desire to blame Obama (or others) for insufficient optimism is denial. How bad will the economy get? I don’t think anyone really knows, but it strikes me as foolish to err on the side of optimism at this point, and I certainly don’t want our elected leaders to downplay the crisis in a false attempt to get people to deny the reality around them.

ProPublica has published a very readable breakdown of the contents of the final version of the stimulus bill.

Nate Silver says everything I’d like to say about the bank bailout plan. Go read it.

He also gets at what’s frustrated me so badly about Paul Krugman over the past few weeks:

My anecdotal experience for the past several months has been that the more someone knows about the economy, the more they know (or at least are willing to admit to) what they don’t know. Anyone who is professing with certainty that this or that will work — nationalizing the banks, for instance — is an idiot.

Paul Krugman is a Nobel prize winning economist, and is deservedly recorded lots of respect and deference on these issues. But he doesn’t know what will or work in this situation. He has theories, but there are lots of people with theories, many of which are at odds with what he thinks. I don’t mind his criticism of the Obama administration, but I think his certitude serves him poorly.