I noticed yesterday that the consumer spending for this month is expected to be up--by, I think they said, .2%. Thanks to Cash For Clunkers. My comment--"Yeah, and without that it would have been negative. I am constantly amazed how such minor blips are played as though they were major improvements. I hear the government is getting ready for a similar program to encourage people to replace their older appliances just without the trade in feature. And I hear a bit of rising concern for what will happen when these programs end--as they will eventually. To my way of thinking, all of this simply postpones the time when we have to realize that a consumer driven economy is inherently unstable and we should do something else. But I rather think we will muddle through without much thought. There are too many vested interests fighting to get the old system back.
Ronni Bennett at Time Goes By linked to this story in the Washington Post. I saw a headline on MSNBC yesterday but did not read it because I could pretty well tell where it was going. I decided to read this one and it is eye-opening. Pundits, legislators and opinion writers described some of these institutions as 'too big to fail' and then we made them bigger. I understand the argument about these institutions and the rationale that we had to save them to prevent a catastrophic collapse of the economy. My problem is--what do we do when (I don't think it is a matter of 'if'') these institutions fail anyway? I agree with those who have said 'too big to fail is too big to exist.' They pose too much of a threat to the entire system. But, think about the argument being made in the health care debate that, to solve the problem of insurance costs spiraling out of control, we should allow companies to 'compete' in a national market where anyone anywhere can buy insurance from companies located anywhere in the country. Thirty years ago, we opened up the banking market on similar claims of efficiency and cost effectiveness. Why repeat that mistake?