Can we afford a Keynesian Solution?

My good Internet buddy Bill Barker of Usually Right e-mailed me this link. In it, Professor Willem Buiter of the London School of Economics questions the proposed stimulus plan.

Bill (both Barker and Buiter) is preaching to the choir here. President Bush is afraid of being accused of doing nothing like Herbert Hoover. Of course, Hoover did actually do lots of things, mostly what President Bush is trying now, a stimulus package and loans to industry. They did not work and when tied with the 1930 Fed's decision to tightened credit, turned a bad recession in the Great Depression.

The problem is bad debt which is causing a lack of confidence. If I was in charge, I would have not done the bail out. I would keep interest rates moderately low and allow the banks liquidity, but put the worst entities into bankruptcy. They could have then restructured if they had value in an orderly fashion.

With respect to the debt crisis, I would recognize the problem is too much debt and bad debt at that. Again, no bail out, but as necessary loosen up laws to make it easier to renegotiate the debt, or write off debt in bankruptcy equal to collateral. Spend the money assisting those in greatest difficulty due to the financial crisis.

But no one listens to me (or Bill for that matter). So we will have more bail outs and a "stimulus" plan we cannot offer which will have dubious value. Speaking of which Barrack! Where is my check!