The case for universal welfare.

Today we are having a "day of the dead" when all the undead companies walk the stock market with a spring in thier step after the Fed has force fed them fresh brains. This is the ideal time to step back from the panic of the moment and consider the longer term, and then panic even more about that.

People can argue all they like about "liquidity" and "confidence", until they show me evidence of solvency I simply won't even listen anymore. People, banks, corporations, even governments are insolvent and this will have very real consequences.

First, we will see deflation as people stop spending to rebuild thier balance sheets. Then we will see corporate defaults. After that, massive government spending in the private sector to try and stem balooning unemployment (can baloons be stemmed?).

In my opinion (notice I do not use the modifier "humble"), the government, the corporations, us as citizens, we are all behind the curve on this one. The dangers are not purely economic - the damage is done and we cannnot escape the consequences - the real dangers are political. The danger is of unemployment, unrest, a swing to the right, protectionism and even world war.

We need to stop fiddling with the economy like we can all get back to 2007 tommorrow, and we need to prepare for 1933. That means we need to build a proper welfare net for all citizens, and we need to make sure that people know about it; this will significantly reduce fear and cut out the hooverville danger. We also need to put together a public works program to employ people while the economy goes through full depression cycle. You can think of that as part of the welfare program.

Redistribution of wealth on this scale will not be pleasant, in many ways it is like putting the country back into 50's austerity, but it is needed because the alternative is simply horrible.