Fortune article: The tools to fend off Great Depression 2

Tell Me It Ain't So
Via Across The Curve, two dreadful numbers from Bloomberg:

http://acrossthecurve.com/?p=1846

"The 2009 budget deficit could be close to $2 trillion, or 12.5 percent of gross domestic product, more than twice the record of 6 percent set in 1983, according to David Greenlaw, Morgan Stanley's chief economist. Two weeks ago, budget analysts said the measures might push deficit to as much as $1.5 trillion. "

"The additional borrowing could push the national debt well past 70 percent of GDP, the highest since the immediate aftermath of World War II, when the U.S. was still paying off war debt."

Can this be correct? And aren't the governments essentially writing a blank check to get out of this crisis?

a tax cut accompanied by mass Federal Reserve purchases of Treasuries -

Is there any substantive difference between the "mass purchase" of Treasuries by the Fed, and just printing more money?

I mean, I understand what is going on here -- printing money leads to inflation, therefore print money in the face of deflation....but someone needs to explain why "printing more money" isn't going to create more long term problems than it solves.

@Don the libertarian Democrat: It's correct that the FY 2009 deficit could be that big, and it's correct that it would set a new peacetime record as a % of GDP. But the U.S. ran deficits of 14.2% of GDP in 1942, 30.3% in 1943, 22.7% in 1944, and 21.5% in 1945, and was able to service and even pay down much of that debt without great difficulty.

So yes, governments are writing a blank check to get out of this crisis. But that's not by definition a bad idea.

BAILOUT THRILLER (con't)
(Michael Jackson's Thriller)
WilliamBanzai7

It's Midnight this October night and the street is full of Central Bankers and Politicians, Lurking in the Dark
Under The Moonlight, You See A Sight That Almost Stops Your Heart.
You Try To Scream, But Terror Takes The Sound Before You Make It.
Debt Markets Start To Freeze, As Horror Looks You Right Between The Eyes,
Your Paralyzed

You Hear The Door Slam, And Realize There's Nowhere Left To Run
You Feel The Cold Take Hold, And Wonder If You'll See the Mother of All Bear Runs
You Close Your Eyes, And Hope That This Is Just Imagination,
But All The While, You Hear The GOP Pachydermata Creepin' Up Behind
You're Out Of Time

They're Out to Get You, There's Demons Closing In On Every Side.
They Will Possess You, Unless You Change The Number On Your Skype.
Now Is the Time for You and Your Trading partners to huddle Close Together
All Thru The Night, It'll Save You From The Terror On The Reuter Screen,
It'll Make You See:

(narrated by Vincent Price)
Darkness Falls Across The Land, The Asian Trading Day Is Close At Hand.
Bottom Feeders Crawl In Search Of Blood To Foreclose on Your Neighborhood
And Whosoever Shall Be Found Without The Soul For Economic Bust
Must Stand And Face The Hounds Of Subprime Hell, And Rot Inside WaMu's Bankrupt Shell.

The Foulest Stench Is In The Air The Funk Of 700 Billion Bailout Bucks
And Shortselling Ghouls From Every Trading Room Are Closing In To Seal Your Doom
And Though You Fight To Stay Alive Your Net Worth Starts To Shiver
For No Investing Mortal Can Resist The Evil Of The Bailout Thriller

'Cause this Is Thriller, Bailout make or break Night
and No-ones Gonna Save You from the Beast about to Strike.
You Know its Thriller, Fed Bailout Thriller Night
You're fighting for Your Monetary Life inside a Killer, Thriller.

Thriller, Fed Bailout Thriller Night
'Cause I can thrill you More Than Any Market Ghoul Could ever try. (Thriller, Bailout Night)
So Let Me Hold You Tight And Share A Killer, Chiller, Fiscal Massacre
Thriller Here Tonight.

'Cause this Is Thriller ,Fed Bailout Thriller night
It Will Thrill You More Than Any Ghoul Could ever dare try
Any Ghoul could ever Dare Try

(Daddy, can I be a Banker for Halloween? No deary...its too scary! Be something funny
like the McCain campaign )

http://williambanzai7.blogspot.com/

Justin, Thank you. I'm feeling a little bit better, especially since I supported the Swedish Plan all along and basically backed what's going on.

But the U.S. ran deficits of 14.2% of GDP in 1942, 30.3% in 1943, 22.7% in 1944, and 21.5% in 1945, and was able to service and even pay down much of that debt without great difficulty.

given that the US was the only industrialized power to now have to completely rebuild after WWII, I'm not sure that our ability to service/pay the WWII debt is relevant to the current discussion. (Not to mention the "truman recession")

Did they pay you for the trade?

@Lisa Takeuchi Cullen: I got several free copies of Fortune.