Hair On Fire
by digby
The reason we’re making analogies with the Great Depression — and the reason I’ve come out with a new edition of The Return of Depression Economics — is the collapse of policy certainties. In particular, the Fed’s sudden impotence — its inability to cut rates any more, because they’re essentially zero — is a very real parallel with the Depression, and necessitates drastic responses.
Now, if all goes well the Obama stimulus plan will head off the worst. But that will be precisely because we understood that the current crisis is, indeed, like the Great Depression in important ways. Only those who learn from history can hope to avoid repeating it.
Boy I hope he’s right because I’m getting a little bit of that Richard Clark running around with his hair on fire sort of feeling right now.