I've heard the argument from Paulson and now Bernanke that, anything less than urgent and full action on this bailout would pose a very serious consequences for our financial markets and for our economy. The argument being that credit markets would continue to retreat causing irreparable and long-term harm to the US and global economy.
So here's my question to the doom and gloom prognosticators: what would happen to the US economy if the government turned around and provided a direct stimulus injection of that magnitude? Better bang for the buck?
Now I'm hardly an advocate for piling on an additional $700 billion onto our already straining deficit. In fact, I've been lamenting the lack of focus in the discourse of the presidential campaigns on the issue of mounting national debt. That said, the concept of fiscal stimulative action to underpin a flagging economy is probably warranted - particularly as we wrestle with daily threats of impending doom if we don't hastily jump-in to rescue the banking system.
I'm just saying.