QUOTE FOR THE DAY: Megan McArdle, on the financial crisis:

No doubt some of my readers are rubbing their hands and saying "Exactly what should happen to people who carry credit card balances!" And I'm sure that among you there are people who pay cash on the barrel for everything, having never taken out any loan for a house, an automobile, an education, a personal financial crisis. These people never even use an American Express Card, which is, of course, a short-term loan. They also do not work for companies that borrow money to buy capital equipment or finance expansion, and their firms do not experience any mismatch between their payables and their receivables. Those people should stop reading now, because I'm pretty sure the Amish aren't supposed to use the internet.

The hostility in some circles to debt is a little confusing to me (I've spent some time in evangelical circles where holding any kind of debt is looked down upon). Not to say people should run up, e.g. credit card debt, but the entire point of credit is to cover large expenses or unexpected fluctuations (the anti-debt people I knew would make an exception for buying a house); keeping some money lent in the system is a good thing. I don't know much about the Great Depression, but I know it was made worse by states' turn to protectionism; I am also fairly certain that our current open system kept financial crises in Southeast Asia in the late 90s relatively contained. This is not an endorsement of everything that's gone on, or of handing over $700 billion (though it's not not an endorsement), but it seems clear to me that the financial system (not unlike the political system) works by stabilizing people's expectations about how things will be in the future, and some of the speculation has been irresponsible (e.g. Consumerist running posts speculating on which banks might have a run); too much speculation can create a problem that otherwise wouldn't be there.

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