Watching Alasdair Darling and Gordon Brown fumbling around with the banks is a profoundly depressing experience. it’s clear that they haven’t the faintest idea what they’re doing — they’re completely out of their depth. (And the Irish government, btw, is off the planet). But I console myself by thinking that Obama & Co probably know what they’re doing. Not so, says Paul Krugman.

Obama and Geithner say things like,

“If you underestimate the problem; if you do too little, too late; if you don’t move aggressively enough; if you are not open and honest in trying to assess the true cost of this; then you will face a deeper, long lasting crisis.”

But what they’re actually doing is underestimating the problem, doing too little too late, and not being open and honest in trying to assess the true cost. The actual plan seems to be to keep the banks semi-alive by implicitly guaranteeing their liabilities and dribbling in money as necessary, all the while proclaiming that they’re adequately capitalized — and hope that things turn up. It’s Japan all over again.

And the result will probably be a deeper, long-lasting crisis.