Tom Friedman hits the panic button

The N.Y. Times Op-Ed Columnist is hitting the panic button on our economic situation and worries that the lame duck period of the Bush presidency is going to last too long. After opining that it would be good to quickly amend the Constitution so Obama could be inaugurated immediately, he suggests that Bush fire Hank Paulson and appoint Tim Geithner as Treasury Secretary forthwith.

This is the real “Code Red.” As one banker remarked to me: “We finally found the W.M.D.” They were buried in our own backyard — subprime mortgages and all the derivatives attached to them.

Yet, it is obvious that President Bush can’t mobilize the tools to defuse them — a massive stimulus program to improve infrastructure and create jobs, a broad-based homeowner initiative to limit foreclosures and stabilize housing prices, and therefore mortgage assets, more capital for bank balance sheets and, most importantly, a huge injection of optimism and confidence that we can and will pull out of this with a new economic team at the helm.

The last point is something only a new President Obama can inject. What ails us right now is as much a loss of confidence — in our financial system and our leadership — as anything else. I have no illusions that Obama’s arrival on the scene will be a magic wand, but it would help.

Right now there is something deeply dysfunctional, bordering on scandalously irresponsible, in the fractious way our political elite are behaving — with business as usual in the most unusual economic moment of our lifetimes. They don’t seem to understand: Our financial system is imperiled.

I can only being to imagine how panic-stricken Friedman would have been in late November of 1932, knowing there was over three months of lame duck Hoover to go. Here's hoping, for all our sakes, that Friedman's panic attack is an overreaction.