I took holy heck from some quarters regarding my estimate that not bailing out Wall Street would cause $15 trillion to $30 trillion in economic damage. Now here is the World's Smartest Investor on CNBC today: "Last week, we were at the brink of something that would have made anything that's happened in financial history pale."
Indeed. Let me also quote my good friend Larry Kudlow from his must-read blog:
I can understand legitimate concerns about a big-government intervention and a giant $700 billion number. There's a shock effect here. But once in a while the financial center of capitalism goes into panic mode and something has to be done. Actually, it's a marvel that we permit government to infrequently come to the rescue of our credit system. It doesn't happen everyday. But it has been necessary going all the way back to Alexander Hamilton's original rescue of our failing debt system in the 1790s. ... It would be great to avoid either a deep credit-driven recession or a global banking meltdown—or both. Paulson has always viewed his rescue plan as an economic-growth tool. I think he's right.
Also here is a great piece of commentary on the risk of doing nothing from Andrew Stuttaford at National Review Online:
I would not rule out the prospect (no, certainty) of very real, and very widespread, hardship if the credit markets continue to gum up as they are now doing. What's more, we should also think about the politics of it all. Somehow I don't see the newly unemployed getting much consolation from the fact that, thanks to new-fangled technology, they have a microwave oven and a car. People simply don't compare their lot with how they would have fared in 1929. Rather, they look at how they were doing a year or so ago. Even a mild drop in living standards can generate a great deal of discontent (particularly when one considers the fact that many people have already seen their incomes stagnate for a shockingly long time). An abrupt drop could pave the way for who knows what. No, you might not get Hoovervilles, but you will get an Upton Sinclair.