How does one address mass hysteria?
The bad debts at banks have yet to be fully acknowledged and written off. The deepening recession will add a lot more to bank losses. Bank recapitalization isnt complete yet. And how does one address mass hysteria (anxiety)? Simply cleaning up, after which the system will be open for new business (even if few will want to do so?). This is where the second player comes in. Governments are in the process of injecting massive spending into their economies, more in some countries than in others, but globally it is big. When private appetite for spending falls away in favour of saving, public spending can temporarily hold up the overall level of demand (and output, even if composition changes are required). The extent of apparent household withdrawal into higher saving is huge (back even to a 10 percent US savings rate is now being mentioned), as is the apparent falloff in consumption spending, and the business cutbacks on inventories, employment and fixed investment. But the government spe
