Yesterday, Pulitzer-prize winning reporter David Cay Johnson posted a letter urging us in the media to be adequately skeptical of the very premise driving the push for the bailout: that the financial markets are teetering on the edge of disaster. There’s also been (for good reason) deep skepticism of the underlying premise that we’re on the precipice of a disaster in the netroots and progressive blogosphere.

I’m skeptical, too. Deeply. But after talking to a number of economists and people who work in the markets, I’m more and more convinced there is indeed a requirement for some kind of government intervention. As this hilariously profane reader over at Ezra’s puts it “the credit crisis doesn’t start in the consumer sector it ends there.” Last week, capital basically went on strike, and if they do it again, they’ll waterboard the entire economy. All the indicators of credit market volatility show that willingness of lenders to lend is shrinking dangerously. The “TED Spread,” which is a metric for how willing banks are to lend to each other, has spiked today, up to where it was last week during the crazy, post-Lehman meltdown.

But saying there’s a crisis is not the same as saying Paulson’s plan is worth the paper it’s written on, or that this has to be passed by Friday.

One thing to consider in evaluating the political terrain for all of this. Conservative Republicans have been railing against the plan, particularly the rump caucus that makes up what’s left of the hard money, Old Right types; Bennet, Bunning, DeMint, Ron Paul, etc… I have significant respect for their ideological consistency. They don’t like government intervention into markets. But keep in mind the flipside of that is that they think the market can fix this, that it will sort itself out. But this is market failure, perhaps the largest of our lifetime. And a real, honest-to-goodness widespread failure of the credit markets is not something to take lightly. It would cause tremendous and widespread immiseration for a lot of working people.