Ten Days that Changed the World Economy

Rob Johnson and Robert Borosage have posted an introduction to a recent Wall Street Journal Article that deserves wide circulation and thoughtful consideration. The WSJ article by David Wessel is entitled "Ten Days that Changed Capitalism". It explains the significance of recent Federal Reserves actions and indicates how close the economy is to a precipice. Here's a quote from Wessel:

The past 10 days will be remembered as the time the U.S. government discarded a half-century of rules to save American financial capitalism from collapse.

On the Richter scale of government activism, the government's recent actions don't (yet) register at FDR levels. They are shrouded in technicalities and buried in a pile of new acronyms.

But something big just happened. It happened without an explicit vote by Congress. And, though the Treasury hasn't cut any checks for housing or Wall Street rescues, billions of dollars of taxpayer money were put at risk. A Republican administration, not eager to be viewed as the second coming of the Hoover administration, showed it no longer believes the market can sort out the mess.

"The Government of Last Resort is working with the Lender of Last Resort to shore up the housing and credit markets to avoid Great Depression II," economist Ed Yardeni wrote to clients.