The vote by the House of Representatives against the bailout surprised me. My own view is that although the current bill is deeply flawed, the passage of legislation is preferable to the effect on the credit markets of no bill. The issue is not whether we will have a deep recession--that seems to me almost a given. The bailout will not in fact "bail out" the entire economy. It may only put a dent in the recession. Yet it is, I think, better than the alternative. The failure to have a bailout may in many scenarios result in a recession deeper than the recession which will follow a bailout. I think that the effect of "no bill" is that just about as much government money will be spent in the long run on shoring up financial institutions--it will just be spent differently, and perhaps with less chance to make a positive difference.
I'm struck by the repetition of history. Panics in 1893 and 1929 followed rampant speculation in unregulated sectors of the market. After decades of protections, safety valves, regulations and controls, a single burst of de-regulation, coupled with greed bordering on delusion, leads us to 2008.
I'm reading about the World War Two campaign in Italy. It's a continual reminder of the futility of warfare, and its immense cost in lives.