Bank runs can be contagious. If depositors at one bank lose their money, depositors at other banks are likely to get nervous, too, setting off a chain reaction. And there can be wider economic effects: as the surviving banks try to raise cash by calling in loans, there can be a vicious circle in which bank runs cause a credit crunch, which leads to more business failures, which leads to more financial troubles at banks, and so on. That, in brief, is what happened in 1930-1931, making the Great Depression the disaster it was. So Congress tried to make sure it would never happen again by creating a system of regulations and guarantees that provided a safety net for the financial system. And we all lived happily for a while — but not for ever after. Wall Street chafed at regulations that limited risk, but also limited potential profits. And little by little it wriggled free — partly by persuading politicians to relax the rules, but mainly by creating a “shadow banking system” that relied on complex financial arrangements to bypass regulations designed to ensure that banking was safe....

The financial crisis currently under way is basically an updated version of the wave of bank runs that swept the nation three generations ago. People aren’t pulling cash out of banks to put it in their mattresses — but they’re doing the modern equivalent, pulling their money out of the shadow banking system and putting it into Treasury bills. And the result, now as then, is a vicious circle of financial contraction. Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant — not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades. Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control. --Paul Krugman, 03/21/08

Obama Bombs: Insane McCain will win it all — and handily too, William Smith

Today, on the fifth anniversary of Operation Stupid, while pumping squirts of that barely affordable distillate from one tank to another (all the while wondering about the sizable charges incurred in that infinitesimal transfer, too) and just wanting it to be enough to at least shut off the reserve light on my gauge for the duration of the short drive home, I figured out the Election results.

Insane McCain will win it all — and handily too.

Because, without a fair, agreed upon division of those Dean-disenfranchised votes, Hillary hasn’t a prayer. The Democratic Party can’t possibly allow that sort of ameliorative proffer. No way. After all, Florida and Michigan have broken their “rules.” They must pay. This from a party, my arcane party, that only needs something like 5,000 votes in a caucus (which probably seemed a really great electoral system for certain Indians tribes—in the year 1650!) to declare a winner from an entire state of millions.

So then, to be “just,” it’s Barack by some goofy sleight-of-hand acclamation at the Convention. Soon after, so much libelous un-sourced innuendo is bruited just as the 527s begin the 24-hour Reverend Wright-Rezko cable bombardments that some of the buildings in Detroit will have to burn. A riot or two breaks out. Flags fly, the Navy Coot stands and says something vaguely Reaganesque and “patriotic,” and jumping Jehoshaphat, he quells the violence (without, of course, adequately crediting all of those discolored “pastors” and oddly dressed pacifists working behind the scenes). Otherwise, Mr. Bush will have to force the issue, as we know he can, with some of the Blackwater brigades that are still working at home for the Carlyle Group and what's left of nearby National Guard troops. Either way, it’s going to work out fine for the Repugnants: McCain is Golden.

Bush Who? BW Spelled It Out Since '98, mail bag

Since 1998 Bush Watch has been writing about what a loser George W. Bush is. Now, NYT readers of Maureen Dowd's "Soft Shoe in Hard Times," which lays it on the line about the horrible Mr. Bush (linked above) have their say. --Jerry Politex

***

Democracy's greatest flaw: it relies on the collective intelligence and actions of the people. If a large percentage of the population is ignorant, egocentric, ethnocentric, and has a "Santa Claus" view about life, then we all reap the consequences (e.g., the election of a deeply flaw president). --Sven

***

Anyone who by now has not noticed and accepted the president's incompetence is, well, disturbed. Mr. Bush has presided over an economic disaster: the transformation of a record surplus (thanks, Bill) to a skyrocketing deficit. Americans can do little more than hold on, wait for a "market correction." --DJF

***

As for Bush's cheerfulness, he has a plan. I don't know what it is, but I'm betting it has something to do with Cheney's "peacemaking' (hah!) trip to the Middle East. Chances are good that he is arranging an 'incident' with Iran, perhaps through Israel, which will give the administration a chance to start yet another war by bombing Iran. Bush probably thinks this will bring Americans to heel once again, the way 911 did, as planned. That's why he got rid of Fallon, who was objecting to an attack on Iran. But it won't work. We are all sick of this man and his cowardly war-mongering, attacking little countries and slaughtering their people. I doubt the American people will stand for any more. --Susan

***

There is only one plausible explanation for Bush's clown behavior in the face of an economic collapse his adventure in Iraq in combination with tax cuts to the wealthy has caused... The dry drunk we had to put up with for several years is now drinking again. I wish drug and alcohol tests were required of our elected officials. --Greg

***

I think in many ways George W. Bush sees himself as having succeeding in accomplishing much of what he set out to do - dismantle as much of the Federal Government as he possibly could - which he did by appointing some of the most incompetent persons possible into each and every agency - from the Dept. of Justice to the EPA to the wasteland that is the Homeland Defense to FEMA and of course ruined the National Guard of every state with the debacle that is Iraq as he has forced them to squander both lives and and equipment through endless tours in Iraq. He also mistakenly believes that he's proved he's more macho than daddy cause he went to war with Saddam - come on George W. its not like you went mano a mano with Saddam - you as usual let others do your fighting for ya! For the issues that people attack him on he is positive that his legacy will be secured be it 100 years from now or when Redemption finally does arrive as he remains securely delusional in his extreme Calvinist ideology that God meant for him to rule and God will save him - for he's one of the "have" and that too is God's plan for George W. Bush. Well, either that or maybe they upped his meds! --Katy

***

It's genetic. During the first Bush recession, his dad zipped around Kennebunkport in a cigarette boat telling us there was no recession. After Katrina, his mom said New Orleans' displaced poor were happier and more comfortable sleeping on cots in the Astrodome than living in their own homes. He can deny evolution all he wants. The Bushes are proof positive that dominant characteristics, in their case lunacy and self absorbtion, will always prevail. --L. Bachmann

***

I don't understand why we continue to be bemused at this sad-sack president. He so clearly is a very, very, very stupid human. It's not his wealth, arrogance, bad companions which make him unable to change in the smallest way. It is the cotton candy between his ears. It's almost a waste of words to write seriously about him. He may be in a good mood these days because his single-digit IQ may have registered that it's almost over. --Lisa Coleman

***

Bush is either as he seems, without a clue, or this all fits his "left behind" ideology of causing the "rapture." If rove had not successfully helped snooker enough Americans into supporting republicons in congress we could have impeached this criminal long ago. Instead republicons refused to even take a casual look at his malfeasance, and now the slim majority of Democrats is hamstrung by obstructionist tactics and a WH that has no regard for any law, including the constitution. --Brandon

***

G W's 'leadership' is almost irrelevant now. We're already in deep trouble, thanks to his shenanigans. he can't do anything to help us at this point. He's led our boat into the middle of the river, and he's paddling back to shore, leaving us out among the cold swift current while the boat is sinking; he's shouting "courage" while we're searching for our life jackets. Thanks, GW. --as

***

Hey, retirement from that nasty job waits in the wings. Even running the country badly for almost eight years would wear out an entire confederacy of dunces. Come to think of it, it may have. ...our leader of what used to be called the free world doesn't hesitate to promise us a rose garden down the road, engineered ~ no doubt ~ by the same coterie that has brought us this far in the new century. --gatekeeper2