It will be bad
The “basic problem” behind the failure to pass the $700 billion economic rescue plan, says Steven Pearlstein in The Washington Post, is that too many people “fail to understand that they are facing the real prospect of a decade of little or no economic growth because of the bursting of a credit bubble that they helped create and that now threatens to bring down the global financial system.” Politicians, financiers, voters, and foreign leaders are all in denial. They, and we, will understand soon enough, when we find ourselves in “a world with less debt and more inflation.” Like it or not, “extraordinary government interventions”—effectively nationalizing much of the financial system, fixing it, and returning it to private hands—beats the alternatives.
This too shall pass
“Wall Street is dead,” says Jason Zweig in The Wall Street Journal, and “whether it was murder or suicide is beside the point.” The financial dominoes toppling over are diverse—large and small stocks, both foreign and domestic; real estate investment trusts; even gold and money-market funds have teetered—but perhaps the most “psychologically damaging collapse” is the “very notion of diversification itself.” There doesn’t seem to be anywhere safe to park your money: 91 percent of all mutual funds have lost money this year. Is there good news? Yes. This won’t be another Great Depression. Diversification will start working again soon. And while “Wall Street is dead, innovation is not.” Bailout or no, “don’t bail out.”
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How our botched understanding of 'science' ruins everything
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Mike Huckabee's head-scratching advice to Christian voters
- 43 TV shows to watch in 2014
- The science of sex: 4 harsh truths about dating and mating
- 6 things the happiest families all have in common
- How Scotland's independence movement lost the vote and still won everything
- What would a U.S.-Russia war look like?
- Adrian Peterson and our misguided debate about spanking
- Why so many Christians won't back down on gay marriage
Subscribe to the Week