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...current crisis reminds us that, in a free economy, the price of the greatly improved long-term performance that only free economies can provide is an ineradicable economic cycle. As John Maynard Keynes pointed out in the 1930s, the cause of the cycle is alternating moods of optimism and pessimism, and its motor is credit, which enables optimism to determine economic activity. However, when Keynes discussed it, the only significant form of credit was business credit, financing capital investment decisions. There has since been a massive growth of consumer credit, which amplified the business cycle and prolonged the recent upswing...
What, then, needs to be done? Government and central bank action, around the world, must have two objectives. The first is speedy intervention to prevent a self-perpetuating downward spiral, which means protecting depositors at minimal long-term cost to the taxpayer. The second is to ensure so far as possible that future booms are less exaggerated. This has implications for the form of any rescue package, and for the system of financial oversight that is put in place...
...Inslee was the state's only Democrat to vote against the bailout, putting him at odds with five other Democrats. It's not that Inslee was worried about getting re-elected; he won 64% of the vote in the August primary and is expected to easily win a sixth term representing the First District, which includes well-to-do Seattle suburbs and the high-tech enclave of Redmond, home to Microsoft - an area full of people whose 401(k)s and stock holdings would likely benefit from a bailout. Inslee says that he simply felt the bill was being rushed...
...paying big prices to fill up, which could be "partially responsible for people's desire not to bail out Wall Street." An editorial in Tuesday's Marietta Daily Journal gave a thumbs-up to the thumbs-down on the bailout, calling it the "right move from a long-term perspective, but what it means for the shaky economy in the short term is anybody's guess...
...Each of the bold moves brought McCain short-term political gain, throwing the normally unflappable Obama off his stride and keeping the Republican nominee very much in the presidential hunt in a dismal year for Republicans. But the tactics also contained the potential for long-term political costs by distracting from, or eroding, the central McCain message. By comparing Obama to a vacuous Hollywood starlet, McCain found a coherent critique of Obama but relinquished his own ability to rise above the political maw. By choosing Sarah Palin, he lit a grass fire of GOP enthusiasm but risked undermining his ticket...