Preventing the next Depression

Today’s financial meltdown is scary, said Laurence Kotlikoff and Perry Mehrling in The Washington Post, but the government won’t let the financial system collapse the way it did in the Great Depression. The markets should return to normal once everyone realizes that. The only thing that can sink us now is if we all get “hypnotized by the bad news” and “pull our economic heads inside our shells.”

Refusing to use the word “depression” to describe this mess might help ward off the real thing, said Steve Fraser in the Los Angeles Times. But “taboos can’t substitute for effective public policy.” And it’s no comfort to know that the same people who brought us the Great Depression—“the laissez-faire establishment and their political enablers”—are still running things.

"It may not look like it amid the wild markets," said The Wall Street Journal in an editorial, "but the world's political leaders are making progress against the global financial panic." Investors won't fill the "capital hole" that is fueling the scare, but central banks and governments are stepping up to plug it with "some public capital" until the panic subsides and things get back to normal.

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We're stuck with "an ugly financial and banking crisis" no matter what we do, said Nouriel Roubini in Forbes online. But it will take radical policy action to keep a "nasty two-year recession and financial crisis from turning into a decade-long economic depression."