[fightinJAG]

The problem is: here we are.

If we don’t do some kind of intervention-—a big one and fast-—the world is going to see a whole more financial hurting going on, and it’s a lot easier (though still painful) to apply the nasty medicine at the beginning of the disease rather than after it has become full-blown.

Central banks are designed for situations such as these to serve as lenders of last resort. While termed a “bail-out,” the central banks do try to recoup as much of the money as possible by various ways of selling the bad paper over time and so on.

A reactionary response to this crisis is absurdly irresponsible.

[unspun]

As in warfare, there needs to be a plan and discipline for maximizing success, minimizing risk — and a sound exit strategy.

This must be a short-term effort. It must not cost more than necessary, while those who performed badly should be punished. And, it should generate a return on investment.

As long as we’re using such “overwhelming force....”

[arthurus]

If we don't do something and do let the market work this thing out there will be a short sharp recession and recovery will soon follow. If we succumb to the need to do do something the situation will be made much worse as we pour the remaining resources of the economy into the maw of this black hole. Those resources, being allocated entirely inefficiently will not be available to contribute to recovery. Congress and the administration are hell bent on repeating Hoover/FDR's conversion of a sharp recession into two decades of Depression only now government manipulation of the economy is the tradition whereas free markets had been the tradition in the 1920s and before. Reagan or Eisenhower Redux will have a much more onerous chore to get the murderous hand of government off the economy sufficient for any recovery.