Midday on Black Friday outside the Pittsfield, Mass., Wal-Mart

So after all the worrying, the first weekend of Christmas shopping turned out to be ... okay. From CNNMoney:

The National Retail Federation (NRF), an industry trade group, said shoppers spent $41 billion in the 4-day Thanksgiving weekend. The average shopper spent $372.57, up 7.2% from the $347.55 spent last year.

What we've seen so far this fall is a big pull-back in spending on cars and on housing-related stuff (building materials and furniture). That, and spending on gasoline is way down because gas prices are way down. But spending on necessities other than gas isn't down, and people are still headed to the Wal-Mart and buying stuff for Christmas (I bought three board games and a fishing rod, although they were meant for pre-Christmas use so maybe they shouldn't count). I'm not sure, though, whether we should take this as a sign that things aren't nearly as bad as many (myself included) thought, or that when everybody wakes up and it's January, things will really go off a cliff.

The future seems especially uncertain at the moment. There are those who would object that the future is always uncertain, and that it is when we think we've captured it in our forecasting models that we've invariably gotten things terribly wrong. But still, it is possible most of the time to be reasonably confident that one knows the range within which growth, inflation, and other important economic variables will fall for at least the next year or two. It's that confidence that allows business executives and investors and consumers to make decisions.

Right now that kind of confidence is in extremely short supply. The economy is shrinking at a rapid pace. That won't go on forever, but when it will end, and what the recovery will look like, is anybody's guess. Are we about to get sucked down into a deflationary spiral, or are the Fed's aggressive actions eventually going to make inflation the real threat? Is the global economic clout of the U.S. going to be permanently diminished by the current crisis, or does this represent a second chance to get things right? Are we really about to enter a new age of thrift, or just take a time out before returning to borrowing and spending? Are we looking at a long-term malaise, or a sharp-but-short shock?

When one is not confident about the answers to such questions, the natural tendency is to hold off on making decisions, especially decisions that involve any kind of long-term commitment. When lots of people postpone decisions, economic activity slumps. Uncertainty is a cause of recessions. And there's so much uncertainty now that this recession could really be doozy.

But at the same time, uncertainty is what makes capitalism go. This was the theme of University of Chicago economist Frank Knight's Risk, Uncertainty and Profit, a 1921 book that's overdue for a comeback. Wrote Knight:

With uncertainty absent, man's energies are devoted altogether to doing things; it is doubtful whether intelligence itself would exist in such a situation; in a world so built that perfect knowledge was theoretically possible, it seems likely that all organic readjustments would become mechanical, all organisms automata. With uncertainty present, doing things, the actual execution of activity, becomes in a real sense a secondary part of life; the primary problem or function is deciding what to do and how to do it.

Knight argued that making such decisions was the job of an entrepreneur, and that business profit was the reward for for being willing to act in the face of uncertainty. This means, I think, that some people who aren't sticking all their money into mattresses (or the modern equivalent, U.S. Treasuries) right now are going to make an awful lot of money over the next few years. Which people? I'm afraid I'm too uncertain to offer an answer to that.

There's an article with my name on it in the new issue of TIME (with Michelle Rhee on the cover). My involvement with it was extremely limited--Massimo Calabresi and Michael Duffy in the Washington bureau did almost all the work--but it seemed rude to ask to have my byline removed. Plus, it's a perfectly good article. Why not get the credit for it? Anyway, go read it.

That's the view from the front door of the house in semi-upstate New York that the Curious Capitalists have rented and stuffed with assorted in-laws for Thanksgiving. Happily, the house is well insulated.

Here's hoping your turkey is well brined, salted, seasoned, whatever. Even if you live outside the Thanksgiving zone.

In the opening chapter of his great history of the Federal Reserve, Secrets of the Temple, William Greider describes Jimmy Carter's choice of Paul Volcker as Fed chairman in 1979 in epochal terms:

At that moment, few in the White House appreciated what would become obvious in the next few years, that this was the most important appointment of Jimmy Carter's Presidency.

What the President also did not grasp was that he was inadvertently launching a new era and ceding his own political power. The choice had occurred by accident, driven by political panic and financial distress. In time, it would profoundly alter the landscape of American life, transforming the terms for virtually every transaction in the national economy and the world's, creating a new order.

Barack Obama's choice of the now 81-year-old Volcker as chairman of his new Economic Recovery Advisory Board isn't nearly that big a deal. But given Volcker's history, it is awfully interesting.

In 1979, inflation was running in double digits and bond investors had lost all confidence in Washington's ability to get it under control. By grudgingly appointing Volcker, then the president of the Federal Reserve Bank of New York (the job that Treasury-Secretary-in-waiting Tim Geithner holds now), Carter reassured markets and, it turned out, put monetary policy in the hands of somebody who was willing to sacrifice just about anything--including Carter's job and those of millions of other Americans--to get inflation under control. In Greider's telling, it was the beginning of an era where Wall Street called all the shots.

That era now seems to have come to an end in another period of "political panic and financial distress," and yet here is Paul Volcker again. He's been advising Obama for months. There was even talk that he might get the post of Treasury Secretary. What does his presence in the Obama camp mean?

Obviously the appointment is meant partly, just as it was in 1979, to reassure markets. Somebody investors trust is, if not in charge, at least standing at the President's side.

But I'd like to think there is more to it than that. Volcker is not an economist, but he seems to have internalized far better than most economics Ph.Ds the lesson that there is no free lunch. That's my interpretation--a more generous one than Greider's--of Volcker's brutal stand against inflation from 1979 through 1981. In the 1960s many economists had come to believe that inflating the currency was a simple and relatively safe way to keep the unemployment rate down--that is, a free lunch. Volcker put an end to that failed experiment.

More recently, Volcker has been outspoken about the dangers of budget deficits and looming long-term commitments to Social Security and Medicare. He has worried a lot about U.S. dependence on capital flows from abroad. He has also studied how financial regulation should be organized in the future, although he's hesitant to draw any strong conclusions just yet. Basically, he has been the voice of prudence and of discipline in an era largely devoid of both.

Whether he'll be a truly influential voice in a new administration that's planning to throw hundreds of billions--maybe even trillions--of dollars at the economy to keep it from collapsing is something we'll find out over the next couple of years. But for now his role in the Obama team at least exudes the reassuring  vibe that maybe the grownups are about to take charge.

The President-elect has announced the appointment of yet another slate of high-profile economic advisers, the President's Economic Recovery Advisory Board, with Paul Volcker as chairman and long-time Obama guy  Austan Goolsbee as the head staff guy. So there's that, the National Economic Council headed by Larry Summers, the Council on Economic Advisers headed by Christina Romer, the Treasury Department headed by Tim Geithner, the Office of Management and Budget headed by Peter Orszag ... Am I missing anybody?

Well yeah, Jason Furman--a top Obama economic aide during the campaign--whom I imagine will soon be appointed to run the Coordinating Council of Economic Advice-Givers.

Maybe it's because I'm an "economic leader." At least, that's what it says on the cover of this new book:

The book grew out of the Creative Capitalism blog that Michael Kinsley and Conor Clarke organized over the summer. My contribution was previously posted here. Making a book out of a blog seemed kind of pointless to me at first, but it's actually nice to read some of the stuff without the tyranny of links.

Jason Zweig, one of the best financial journos out there, went to town on conspicuous consumption today. Seriously, until you don't have enough money to take public transportation, do not try to bellyache about your stock-market losses around Jason.

His piece, entitled "What a Bear Market Might Teach Us," is part of a burgeoning discourse in certain hopeful corners that we're on the cusp of The New Thrift. I'm not so sure that's going to happen overnight—isn't this the Christmas we're all supposed to go out and buy a Detroit-built car to save the American economy? But maybe it's a doable concept for the medium-term. Consider my corner hopeful.

Barbara!

For all those people out there who want to know why they're not seeing more of this government bailout money directed at ordinary folk, boy do I have an acronym for you.

Meet TALF, the Term Asset Backed Securities Loan Facility. This morning the Treasury Department announced that the Federal Reserve Bank of New York (FRBNY—pronounced, I assume, "Fribnee") will start making up to $200 billion in loans to juice the market for securities backed by lending to small businesses and consumers. The issuance of these securities, which gin up lending for things like auto loans, student loans and credit cards, essentially disappeared in October. This is a shot at getting it back—and helping people out there who are struggling to borrow money for cars and college and Christmas shopping. Does that make you feel any better about all the other things the government has been spending money on as of late?

Here are the specifics of how it will work: Under TALF, FRBNY will make loans to issuers of asset-backed securities (ABS) that have the highest investment-grade rating (like AAA) from a at least two nationally recognized statistical rating organizations (NRSROs). Small business loans must be guaranteed by the Small Business Administration (SBA). FRBNY will take the AAA (or otherwise NRSRO/SBA-sanctioned) ABS as collateral for loans that the ABS-issuers will ostensibly use to go out and make more ABS (and, in turn, more loans to consumers and small businesses). To manage the TALF loans, FRBNY will create a special-purpose vehicle (SPV). The SPV will buy the assets securing TALF loans. Treasury's (UST's) Troubled Assets Relief Program (TARP) will buy debt issued by the SPV to finance the first $20 billion of asset purchases. If more than $20 billion in assets are bought by the SPV through TALF, FRBNY will lend money to the SPV. So TALF and its SPV are FRBNY's thing, but UST and TARP—i.e., BARF—are standing behind it. Like any BFF would.

In other news, the Federal Reserve said it will buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks (a.k.a. the housing-related government-sponsored entities, or GSEs), and up to $500 billion in mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac and Ginnie Mae. The market for those things hasn't gone away like it has for the sorts of ABS TALF hopes to jump start, but the spreads on GSE debt and GSE-guaranteed mortgages have widened, making affordable mortgages incrementally harder to come by, which is why the Fed is jumping in. The other obvious difference is that the acronyms in this announcement aren't nearly as much fun to play around with. I mean, GSE? Come on. It's not the '90s anymore.

Barbara!

The Conference Board Consumer Confidence Index rose a bit this month, after hitting an all-time low in October (the measure goes back to 1967). I don't know that it means all that much, but it is an indication of something that should start playing out more broadly in economic data releases--and perhaps injecting a touch of optimism into the national discourse--over the next year: When the comparables are bad enough, it gets a lot easier to beat them.