I started Stayin' Alive as a public health blog, but for those of you who don't already know, my degree is in social policy and I did have to endure the study of economics and pass qualifying exams in that "discipline." What I principally learned, as I have made clear enough, I think, is that economics is largely a crock. However, there are some people who practice the profession who are not ideologues or theologians, and who do actually try to make a study of reality, rather than imposing their a priori theories on an unreceptive universe.
One of them is James K. Galbraith, with whom I essentially agree:
It's more hype than real risk. A nasty recession is possible, but the bailout will not cure that. So it's mainly relevant to the financial industry.
Actually, a nasty recession is more than possible, it will happen. It is happening already. The housing bubble was the last spasm of our latest Gilded Age, which is now over. We've been living beyond our means, on money borrowed from foreigners, and we can't do that any more. People who spent their lives nurturing small businesses will see their creations destroyed. People who struggled all their lives to build a modest nest egg will see their retirement dreams evaporate. Hunger and want will grow in the land. This will not happen because the credit markets lock up and hedge funds and investment banks fail. It will happen regardless.
There is much that the federal government can do to ameliorate the pain and hasten the day of recovery. In addition to enhancing the safety net for the people who will be seriously hurt, we need to invest in a sustainable future, in real job creating and wealth producing activities. What we don't need to do is rescue the socially destructive, unproductive and parasitical financiers of Wall Street from the horrible prospect of losing a portion of their billions and ending up as mere millionaires.
The legislation the Congressional Democrats are talking about now is certainly more defensible than the outrage Henry Paulson tried to impose on us, and it might even have some desirable elements such as help for distressed homeowners and limits on executive compensation. Best of all, they're talking about committing only a portion of the money, maybe $150 billion, and taking another look before they pony up the rest. A case can be made for passing something like that, so everybody calms down and the markets stabilize and we can get past this and go on to a serious discussion about the nation's future. But right now, we aren't having that.