The problem with your idea is that letting banks and companies fail could create not only widespread panic among consumers and investors, it could also create a chain reaction where failures occur like falling dominoes, especially where comapnies are related to one another through contracts or supply chains or debt.  You'd probably also see most of the surviving banks and companies start retrenching heavily worried that they could also get swept away.

In a lot of ways your idea was what they did at the beginning of the great depression, letting banks fail, didn't work out so well, as it spread even to healthy banks.

Where were your complaints about the debt when Reagan and the Bushs were pushing it into record territories?  Funny how you start complaining now about the debt.

Where was I when the Bush was pushing us to recored debt? Screaming at the top of my lungs along side you. You just didn't notice. Now that I have the same issue with the guy you like, you notice.

And no, it would not cause wide spread panic. If you look at the markets (an indicator of consumer confidence), the markets went up every time something bad happened, like when GM filed, and when Chrysler filed.

A good analogy would be this:

let's say you have 30 people held hostage by a man with a gun, with 6 bullets.

How long they are held hostage represents how long we are going to be in recession. The longer the man stands there with a fully loaded gun, the longer none of them will move. As soon as he has shot 6 people, what do you think the other 24 will do?

Once they know the problem is over, they will not cower in the corner crying, they will take action, and take down the guy.

Put a little more trust in people. The faster we can hit the floor of this thing, the better. The worse it gets, the more resolve Americans have.

The worst thing we can do for the recession, is making it last longer. There is no advantage to make it fall slower.

And the "dominos" you talk about falling, are falling anyway.

How long do you think it will take to erase 8 years of foolishness, stubborness and the like? He's been in office for barely 6 months. It will get worst before it gets better.

Highway, excellent post. +1.

Again, why do I have to explain civics.

Congress runs the economy, not the President. 8 years bla bla bla is just party bullshit. Dems have been running the economy for 3 years, and done nothing worth a shit yet (just like the republicans before them).

The worst part about it, is I know you know this Madskillz, so stop being a puppet for the party.

Perhaps you missed those thousands of points the market lost last fall when this was starting, and how the market plummeted when the bailout was first time defeated in the house?  You say there was no panic, the only reason we are stabilized at the moment is because of the government intervention, when the market was panicking last fall and winter.

Actually things aren't falling that much at the moment, what we have a concern of right now is things remaining stagnant where they are right now, 10-12% unemployment is expected, but if there hadn't been any intervention by the government last fall and winter, we could be looking at unemployment much higher than what is happening.

Is that WW or US?

i am sorry, but you are 100%, without question, wrong. Wrong wrong wrong.

What would have happened, is millions of people would have lost there job, thousands of busnesses would have gone out of business.

But when the dust had settled, people would have started finding jobs, businesses would be growing, the one that should of failed due to poor management, would be gone, and room would open for good businesses to succeed.

The government fixed nothing. 100% nothing. They have caused far more problems in this recession then they have fixed. All at the cost of thousands of dollars per American.

Quite honestly, they should all be thrown in jail. Just about every politician for the last 30 years. and especially the ones for the last 10.

To say any of them are doing a good job, is to be blind by party politics.

I say that, because if McCain had won, he would have done the same thing Obama has done, and you would be bitching about it along side me, and not arguing with me about it's utter lack of effectiveness.

Dude I have history to point to you to show you that is not how it would work, we would have had years even decades of stagnation and people being displaced looking for what little work still existed.  The reason is that the amount of consumption in this country would have fallen so far that there would be little room for the surviving companies to expand and hire and more people would be out of work driving consumption even lower at alarming speeds and we'd be in a deflationary cycle with prices falling rapidly.

Sorry but that is wrong, the government stabilized the economy, what we have now is bad recession rather than another Depression.

No if McCain had won he would have probably been very Laissez-faire about the whole thing, and we'd be careening towards another Depression, I would be complaining about that

http://en.wikipedia.org/wiki/1921_recession

"The recession of 1921-1923 proved to be the sharpest economic downturn since the emergence of the business cycle in the early 19th century, but it also was one of the shortest reversals. The recession was over in one year.

Economist Thomas Woods argues that President Harding's laissez faire economic policies during the 1920/21 recession, combined with a coordinated aggressive policy of rapid government downsizing, had a direct influence (mostly through intentional non-influence) on the rapid and widespread private-sector recovery. Because there existed mass distortions in private markets due to government economic influence related to World War I, an equally mass "correction" to the distortions needed to occur as quickly as possible to realign investment and consumption with the new peace-time, government-free economic environment.

Woods argues that the massive 1921 recession and subsequent rapid recovery is an episode in the history of capitalism and economics that is woefully understudied. He believes it to be a watershed case proving that free markets adjust prices and supplies much more efficiently than any government coordinated action, and that Keynesian philosophy ignores the '21 episode because it suggests government intervention is not required in such "crises." The 1921 recession/recovery could have been a model for recovery from the "Great Depression" one decade later, which instead focused on massive government spending, trade tariffs, and price floors - rather than letting the markets quickly and efficiently adjust.^"