No more Mr. Nice Guy from Paul Krugman. If we want economic recovery, then socialism is the only path. Today's column is one of those really frustrating pieces that we sometimes get from the Great Nobel Laureate.

Once in a while (kind of like the broken clock that tells time correctly twice a day), Krugman starts saying intelligent things. For example, I remember one column several years ago in which he was criticizing the "lump of jobs" theory which holds that there are only so many jobs out there and that they need to be parceled out like slices of a pie to make sure there is no unemployment.

Alas, instead of pointing out that the biggest promoter of this economic stupidity is organized labor, he then switched to criticizing the Bush administration for not spending enough on the "No Child Left Behind Act." I kid you not. It was the ultimate non-sequitur.

Today, the Nobel Laureate writes about zombie banks and the foolishness of bailing out these institutions. He gives a cogent explanation as to why these banks and financial institutions are failing, and then even (for him) gives a plausible explanation as to why bailouts fail. I asked myself, "Is Krugman actually going to make sense today?"As I read through this piece, however, I had a sense of dread, for just as my dogs act like, well, dogs, Krugman is going to be Krugman. The man is not intellectually capable of putting two and two together and getting four.

And just as Krugman leaped from debunking a fallacious theory of labor to tying it to the "No Child Left Behind" law, today he explains why bailouts cannot save these financial institutions, and then offers his Big Solution: Socialism.

Here is the climax of debunking (or at least a quasi-debunking):

Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued.

And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.) Realistically, it’s just not going to happen.

Krugman provides his "solution" here:

So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

Yes, socialism is the answer, but these people are myopic. Now, when the Bush administration was in power, he would accuse them of being -- gasp! -- free marketeers. He is not going to lay the same accusation on his friends today.

No, it is just that they somehow are blinded by myopia. Now, I cannot figure why someone like Larry Summers or Barack Obama would not jump at the chance to impose even more socialism, given both their proclivities and their egos ("Yes, we can!").

However, now that The Great One has openly endorsed bank socialism (Am I being redundant?), there is intellectual cover. Obama can tell us that Paul Krugman has declared bank socialism will work and Krugman won the Nobel Prize!

By the way, if you want to read something that actually makes sense, read the LRC columns today by Robert Higgs and James Grant. No, neither of them own Nobel Prizes, but they know their economics and finance, unlike the star of Princeton University.