Nicholas von Hoffman does a good job summarizing the extreme cases of rescue that might be attempted or not. His portrayal of of the stimulus--"will the Obama plan be a stimulus to higher levels of economic activity or a life-support system maintaining an economically comatose patient?"--hits the bulls-eye.
However, there are other alternatives--some even written about by William Greider--that I believe would prove to provide and alternative to the polar cases Mr. von Hoffman offers.
They are of course the bank holiday, as Mr. Greider exquisitely explained. And then there is the public central bank, something that Canada saw fit to do in 1936.
The bank holiday cleans up the banks' balance sheets while the public central bank provides capital, at cost to the surviving banks and for profit to the US Treasury.
Obama's stimulus plan will not work, in my opinion, because it is too small (concurrence by Krugman and Stiglitz) and it is not directed properly.
What we need is Medicare for All and a shorter work week. Medicare for All would recapitalize state and local governments, who are now going bankrupt, recapitalize business that could then be asked to reduce work week hours to keep more employees or indeed hire more people and the under- and uninsured, who are mostly the unemployed and the working poor whose jobs don't include medical insurance while their wages preclude medical insurance.
Mr. von Hoffman's either/or is fine as far as it goes, but there much more to consider in the way of answers. Unfortunately, he may be all too correct that these will be the choices that the politics give us.
Jan 10 2009 - 2:04am