Paul Krugman has been making the rounds of the network morning shows, urging the government to "go big" in spending to revive the economy. His only concern is that Obama might not be planning to spend enough. Heck, even FDR wasn't a big enough spender in his book. View Krugman's weekend GMA appearance in which he says that here, the episode in which, as discussed here, Krugman of all people had to talk Kate Snow down from her fantasy of Obama "forcing" the Bush administration to adopt his policies.
None of the network shows had anyone on to debate Krugman. But the Early Show did invite Jim Rogers in today to give very much the other side. The legendary investor's take: let the banks fail. The massive bailout underway will put our country in hock for decades. Almost 20 years later, Japan has still been unable to get out of the hole it dug when it, like the US now, decided certain institutions were too big to fail.
JIM ROGERS: Unfortunately, those turkeys in Washington are bankrupting you and me and our children and everybody watching this show to save their friends on Wall Street. I find it outrageous. I find it morally outrageous, and it's bad economics.And a bit later . . .
ROGERS: You and I are going to get to pay higher taxes, and our childen are going to have inflation and higher taxes. It's outrageous.What do the free-marketers out there say? If you could, would you let creative destruction have its unfettered day?
HARRY SMITH: We talked to Arthur Levitt last night, he says, you know what? We can't allow these institutions to fail. Is that true?
ROGERS: He is absolutely wrong. Banks have been going bankrupt for hundreds of years. Investment banks have been going bankrupt for hundreds of years. It's not the end of the world. You need to clean out incompetency.
SMITH: What would happen, for instance, if what happened to Lehman happened to everybody else? If all of a sudden we woke up tomorrow and all these institutions down on Wall Street didn't exist anymore?
ROGERS: Harry, we would have a very bad couple of years. But you know what's going to happen now? We're going to have a very bad decade, all of us. Let a million people on Wall Street suffer. There are 300 million Americans. We're going to all suffer for maybe a decade, maybe two decades. The Japanese did this in the 90s. They wouldn't let anybody fail. Two decades later they're still trying to recover from the problems because they wouldn't let anybody fail.