I don’t know why I even bother, but I still keep an eye on the unfolding crisis. Casey B. Mulligan has written a rather optimistic op-ed in The New York Times where he claims that it is not necessary to rescue the economy because it is stronger than what it might seem. And it would not suffice to bail out the banks if necessary anyway; he dismisses the bailout plan. And by arguing that the economy is strong and not that dependent on banks, he calls of the announced depression at the same time. Given the gloom reported in most newspapers, this must be said to be rather optimistic. I gather that we live in the short term and are all dead in the long run, Mulligan argues that a short term banking crisis does not necessarily matter much:
And if it takes a while for banks and lenders to get up and running again, what’s the big deal? Saving and investment are themselves not essential to the economy in the short term. Businesses could postpone their investments for a few quarters with a fairly small effect on Americans’ living standards. How harmful would it be to wait nine more months for a new car or an addition to your house?
Also, this post on the Environemental Economics blog points out that the stock market has given a handsome return over the last 60 years even after the recent turmoil. So, cheer up, folks!