Economists Agree Time Is of the Essence for Stimulus
By Steven Mufson and Lori Montgomery
Washington Post Staff Writers
Sunday, February 8, 2009; A01
With Congress moving closer to adopting a $820 billion stimulus package and the Obama administration poised to unveil a new bank bailout plan, economists say that the federal government is taking its biggest role in the economy in a generation.
States that once aspired to blaze trails independent from Washington are turning to it for money, banks and businesses that once decried regulation now are seeking federal capital, grants or tax cuts and individuals are looking for tax relief.
“This is a seismic shift in the role of government in our society,” said Allen Sinai, chief global economist for Decision Economics.
“Those who believe the government can be an effective, positive instrument for good will have another chance to try it,” said Sinai, a political independent.
While economists remain divided on the role of government generally, an overwhelming number from both parties are saying that a government stimulus package — even a flawed one — is urgently needed to help prevent a steeper slide in the economy.
The Washington Post, New York Times and other lesser lights of the newspapering industry (themselves directionless and floundering) trot out one expert plea after another, while a stunned Congress points fingers and a more seriously stunned populace sheds jobs, homes and life savings.
I am not an economist. But I have been a lonely voice these past ten years, predicting (in the face of friends and associates bagging money) that the system was so severely fraudulent that it could not long stand. Now, we have an Abraham Lincoln moment: “A nation divided against itself cannot long stand.“
We are surely divided against ourselves and bailing out those who ruined us will divide us further. My non-economist mind tells me we would be better to A) let the markets go down the drain, so we can actually recover instead of bandaging ourselves and B) build a network of Federal Banks to loan to credit-worthy individuals and businesses.
Other banks, investment houses, insurance companies and the like, would not be on the list. Deposits would no doubt flow from shaky banks into the Federal Banks, allowing credit markets to rearrange themselves among the credit-worthy. Lots of banks would go under, many others survive and thrive, but in an honest and ruthlessly Darwinian manner.
Somewhere down the line, first-time drug offenders would be sent home from prison to make room for those who Ponzi-schemed an entire nation into ruining the world economic system. The thousands who robbed and defrauded their way to immense wealth, yet deny they ever personally held the gun, would face their day in court.
Meanwhile, the courts of public-opinion across the world–the only ones that actually count–might once again gain some faith in in a system of economics that requires faith to survive. Economists and financial analysts have had their way with us and we lie in the gutter–raped, abandoned and shunned, while those who defiled us straighten their tie, pull on their gloves and demand another chance at a relationship.