Will the economy seize?

The last few days I've been downloading the podcasts of the Diane Rehm Show to listen to at lunch time. It's a nice happy time (despite the topic) to sit outside, eat lunch, watch the campus foot traffic, and attempt to catch up on the government financial bail-out plan.

I only got through about 15 minutes of the show, but today's is excellent. In general I love this show, it's very critical without being partisan, at least the first half before the call-in questions start. Even that part is useful. They always give great explanations that are intellectual, yet not so politicized that I can't follow what's going on.

Today was a nice discussion of the potential disasters if congress does not pass a bail-out this week before they break for the year. They were not expecting doom and gloom, but certainly the worst case is quite disastrous. The gist that one guest was emphasizing, primarily via examples, was our dependence on credit in our own economy. Previous shows presented the impact of our credit structure on world economies and our ability to recover our own economy. A quick summary being if our economy faulters and we have enormous government debt, other foreign companies and governments will not have incentive to invest via loans and recovery will be exceedingly more painful and drawn out.

The expectations of today's guests was that congress would pass something, but it would most certainly include limits and guidelines on executive pay, relief for homeowners, and limits on the control of this new unbridled power of the secretary of treasury. They expect that a plan for next steps will not even be touched until 2009.

Anyway, if you want to get a good perspective of what's going on, I recommend checking out some of the last few shows. They are broken up into ~15min segments. The first two segments are typically the best. Diane Rehm is out this week, so they have guest hosts who both are very good. Today's 10am "Debate over Treasury Rescue", and Monday's 10am "Tresury Rescue Plan." You can stream them from the show's website or download a free podcast from itunes.