> But the point is the reverse. If debt levels remain too high - and
> they are too high - then the problem with "get lending restarted" is
> not that it might work and return us to 2006, but that it will never
> actually get lending restarted because no one will want to borrow.
> Which is exactly what will happen, I say. The only way to get credit
> restarted in a world where private actors don't want to borrow is for
> the govt itself to borrow - i.e., fiscal policy.
Speaking of which - Doug, you sometimes seem to take the position that the bourgeoisie has gotten the whole bailout thing down to a science, so the damage to the economy will be limited to that extent. There's some truth to this, but I just looked up some stats on the Japan case. The only thing that kept their economy from suffering a worse depression than the 1930's US was the massive deficits they ran. But those deficits increased Japan's public debt as a share of GDP by 70 percentage points over 15 years. 70 percentage points! In today's US terms that would come to something like $10 trillion of more debt. Anyone looking at the political climate today would have to conclude that even a fraction of that stimulus just isn't politically possible. The US has some big fucking problems.
SA