Are the wheels falling off Obama’s bandwagon?

The same mainstream media that fawned over President Barack Obama during his historic run for President and the early days of his young, yet struggling administration, are now stepping back and asking serious questions about his policy decisions and actions.

Newsweek notes that Obama is seriously underestimating the depth and probably length of the current financial crisis.

Nobel Prize winning economics professor and New York Times columnist Paul Krugman unleashes a stinging critique of the administration’s latest plan to deal with toxic assets, noting that Obama’s biggest failure is his belief in the current, flawed financial system.

New York Times columnist Frank Rich says Obama’s inability to deal effectively with the current financial crisis is his administration’s "Katrina" moment.

Clearly, the Obama administration is in trouble and his inexperience shows. The President’s extraordinarily high approval ratings are slipping in new polls, his missteps are reflected in a nervous, and flucuating stock market and his Republican opponents, considered politically dead just a few short weeks ago, are rebounding.

New presidencies are often measured in their first 100 days. Obama’s first 100 days may be on its way to a disaster.

Writes Frank Rich:

A charming visit with Jay Leno won’t fix it. A 90 percent tax on bankers’ bonuses won’t fix it. Firing Timothy Geithner won’t fix it. Unless and until Barack Obama addresses the full depth of Americans’ anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: “President Obama may not realize it yet, but his Katrina moment has arrived.”

Krugman’s take:

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

And this from Newsweek:

The good news from our historical study of eight centuries of international financial crises is that, so far, they have all ended. And we confidently predict this one will end, too. We are just not quite so sure it will be nearly as soon as the chirpy forecasts coming from policymakers around the globe. The U.S. administration, for example, is now predicting that growth will renew in the latter part of this year and continue at a brisk pace of 4 percent for several years thereafter. Is this a fact-based forecast or wishful thinking?

A careful look at the international evidence on severe banking crises suggests a far more cautious assessment. The recessions that follow in the wake of big financial crises tend to last far longer than normal downturns, and to cause considerably more damage. If the United States follows the norm of recent crises, as it has until now, output may take four years to return to its pre-crisis level. Unemployment will continue to rise for three more years, reaching 11–12 percent in 2011.