Bailout Prevents Great Depression 2.0

What would be the dollar cost of not bailing out Wall Street? Try a number north of $30 trillion. (The awful math is detailed below.) That’s why Hank Paulson and Ben Bernanke were so scared last week. And, yes, I think “scared” isn’t too strong a word. You don’t think they convened an emergency nighttime meeting of congressional leaders and then walked out with something close to a blank check for a trillion bucks because they thought we were headed for an outright recession, even a fairly nasty one?

Nope, I think they believed, and got Congress to believe, that the economy was on the verge of something far worse than the worst downturn in a generation. And that is why they went with the so-called nuclear option: the biggest financial bailout in history. In the words of JPMorgan Chase economist James Glassman**, **“Thankfully, we and our friends around the world who are watching the economic lights come on will never know where events would have led, if the clock had not stopped [last] Thursday afternoon… Last week’s events made the 1987 stock market crash look like child’s play.”

As plumbers say about pricey repairs, “Sure, it costs money. It costs money because it saves you money.” And plumber in chief Paulson had a pretty big pipe, loaded with toxic debt, to unclog.

usnews.com/blogs/capital-commerce/2008/9/22/bailout-prevents-great-depression-20.html

How close were we? It looks like we were very, very close, and not out of the woods yet.

Economic depressions occur on the average of about once per century, or so I’ve heard. It takes that long for people to forget. Once they forget, it’s easy to repeat the bubble and bust.

It’s not that obvious the 700 billion package will go through, and even if it does, it is not exactly obvious it will address the fundamentals beleaguering our economy. Hence the trader uneasiness today.

That’s the key fact at the moment. Things are a long way from stable, or under control.

Gerry

The fundaments of our nation’s leaders are not sound. Take religion out of the picture or reduce its role in social life, then what’s left is some version of the love of money is the root of all evil.

It matters not how big or how many checks are cut. Without a reformation of the character of our nation’s leaders, we’re doomed. We will reap what we’ve sown.

From watching just a bit of the hearings today, the bailout is anything but certain. Members from both sides are very concerned that things are moving too fast.
I even heard this from Newt Gingrich on NPR yesterday.In fact, he seemed to oppose just about any bailout.

John

DISCLAIMER: The views and opinions expressed in these forums do not necessarily reflect those of Catholic Answers. For official apologetics resources please visit www.catholic.com.