I doubt that this will suffice. They will have to come back from more stimulus/recovery legislation. Probably fairly soon. Maybe there’s a role for the venture capital industry as one part of the mix.

http://bgladd.blogspot.com/2009/02/what-now.html

So a Democratic president pushed through a Democratic congress (with almost no GOP support) a stimulus bill that only liberal Democrats seem to love, and which you admit in your article may or may not work. How confidence inspiring! I'm sure that will turn the economy around pronto.

Well said, Andrew. The stimulus plan is not perfect, but I'm pleased that it's better than what first passed the house. As an economic centrist, I'm supporter today while I had serious misgivings with the house bill. However, the job is far from done. Obama still needs to sell the stimulus bill to more of the public, and inspire confidence that this will work. He also needs to temper that with a sense of realism and willingness to make sacrifices for the future. The credit fueled culture of consumerism is ultimately not sustainable. I hope we take the lessons of the current crisis to build a better base for the next couple decades.

Well said, Andrew. The stimulus plan is not perfect, but I'm pleased that it's better than what first passed the house. As an economic centrist, I'm supporter today while I had serious misgivings with the house bill. However, the job is far from done. Obama still needs to sell the stimulus bill to more of the public, and inspire confidence that this will work. He also needs to temper that with a sense of realism and willingness to make sacrifices for the future. The credit fueled culture of consumerism is ultimately not sustainable. I hope we take the lessons of the current crisis to build a better base for the next couple decades.

Said the old Chinese man in the story about life to the villagers as things happened. Obama got the spending bill moving; good luck, bad luck, who knows?

It's unclear to me that tax cuts spur any kind of growth in this environment. The comment about confidence in the economy applies to real people, both rich and poor, along with artificial people called corporations. Give any of them a little more cash (and if they're not making anything, *very* little cash) and they will keep it under wraps. I guess that makes me a spend-sider on some level.

We'll see. My overall opinion of a President tends to take a couple years to form. I could wish that latency on everyone else, some days. But then, what would be the fun if you couldn't run into a troll at the bar with a bunch of preconceived instant-talking-point notions that have no basis in fact. Maximum Entertainment Value does tend to rule.

And the MEV of the current situation is definitely epic.

And amen again. The economy is the aggregate of all those illusions, and professional economists enamored of quantifiable models don't seem to get that. This was step one -- slowing the freefall. But we all know something more fundamental and permanent is needed.

Next Obama must make genuine steps towards reversing Hacker's "Great Risk Shift." Universal health insurance, even something as bare-bones as national catastrophic loss insurance for everyone forever (low-hanging fruit that will be painful politically to oppose), especially if supplemented by an optional, premium-based Federal policy underneath the catastrophic layer (available to everyone at lower cost because exposure is capped), with comparable competitive private insurance allowable through employers, associations or otherwise, would be a gigantic step toward permanently raising the national confidence level. (In other words, a program that, at the same time, is universal and "single-payer" at the catastrophic level [dramatically reducing the worst fears of complete financial catastrophe from a health problem], yet "builds upon the existing system" of private insurance and does not need to rely on an employer mandate.)

Other power enhancing steps for ordinary workers to grab a bigger piece of the pie while making it grow for everyone at the same time -- e.g., stronger unions -- will help a lot, too.

...and wouldn't he actually BE an effective leader who gets things done? illusion, schmillusion?

Now don't get me wrong - I'm a liberal in every sense of the word - but this fluffy writing you've given us surely is meant to direct people into the right/positive direction.

Let's hope you haven't built false hope. For there would be nothing worse than finding out that all the positive and confident feelings in the world will accomplish nothing in the face of an unbeatable perfect storm to the economy.

It is easier to build upon a foundation of truth than the facade of unjustified confidence.

The key ingredient in our collective delusion is confidence.

There's Andrew Leonard claiming again that our economy is based on delusional thinking. Bad habit!

Confidence is the key ingredient in the lending and investment markets. That is all. The people who operate in those economic sectors need confidence that the money they're giving away will, in general and in the long run, prove to have been worth having parted with it.

That, one may argue, is a mechanism fraught with fuzzy thinking, crazy ideas, superstition, and so on. Delusion, perhaps, even. But it's not, fundamentally, a delusional mechanism.

And what's more, it's important to understand that the entirety of our consumer capitalist economic system is not comprised of just those sectors. Consumers — meaning people who are spending instead of investing or lending, meaning most of us at least most of the time — don't need confidence. They need cash.

Lately the popular way to get spendable cash to consumers has been through lending on credit, so it might be tempting to say that, indeed, if lenders won't lend and creditors won't credit because they lack confidence in the market, then consumers can't spend.

Except that extending consumers lots of credit so that they could spend it is a historical anomaly, and is exactly what got us in the mess we're in right now to begin with.

The reason for that is not hard to understand. More and more lending is fine as long as the borrowers pay it back soon. But on the other hand, if you're simply encouraging lending as a way of masking the structural failures of your economy — like, say, a decade of stagnant wages, oppressive trade agreements, lack of investment in education and training, and so forth — it's simply a matter of time before your house of cards falls over.

In other words, no matter how much credit you extend, sooner or later consumers need to have income. Actual, honest to god, value-added, wage-paying work. There's nothing delusional about that. In fact, the more you try to get delusional about it by shrinking income and expanding lending, the more illiquid the money supply becomes, and the more likely you are to end up in a situation exactly like where we are right now.

So just establishing confidence in the credit markets is not going to help super much, even in the short term. If people aren't earning income, they won't be any better able to pay off their credit cards than they were before.

The bottom line of the spending package Obama has been pushing is that it needs to get people to work. If people are working, the economy will start to recover no matter what the details of the plan are, and economic purists can go screw.

I hate sounding like a broken CD, but there's nothing delusional about that reality.