[expat_panama]

"...absolutely inevitable, either massive defaults and a financial system that is crippled for years or decades, or inflation..."

Reality is not nearly as bad as all that.  As recessions go, the current one is about the mildest on record.   If anything is unprecedented this time it's the negativism.    So much cash hoarding, people panic selling solid assets at bargain basement prices.

I'd bet the whole problem could be solved in minutes if traders would take a break and soak their heads in ice water.

[palmer]

I agree the recession isn't that bad at the root (mostly frictional unemployment in the transition away from overbuilding and overdecorating houses). But the derivative mess made sure that the credit markets would freeze because no bank wants to give a thin dime to another bank if that dime goes towards paying off some debt. That would simply transfer a bad debt from that bank's books to their own books. No equity investor is is putting money into banks either (no sane ones anyway) because the government has decreed that they will get the shaft (how does one penny dividend sound to you?) The last resort is the future taxpayer, or if we inflate instead, anyone who has dollars.

So while the recession wasn't bad and the investment environment was ok outside of the banks, the transition from credit and consumption to savings and investment is difficult and the government is making it much worse (threatening to clobber savers and killing off financial and real estate investors). All we need is real, long term investment, not stimuli, not floods of credit, not anything else the government is creating.

[1010RD]

The negativism serves a purpose: Elect Obama and create the appearance of the need for massive government control of the market.

[bronxboy]

What? Have you noticed the unemployment figures...we are about to surpass the 81-82 and head into depression numbers. This indeed the worst economic collapse of my lifetime.

[meyer]

If anything is unprecedented this time it's the negativism.

Much of the negativism is related to the fact that we've just elected a Marxist as President. The economic situation can only get worse with this moron in charge.