Robert Reich has joined the ranks of those saying that the economy is falling off a cliff. His latest blog entry,
"Shall We Call It a Depression Now", takes note of Friday's alarming unemployment report -- the US has lost nearly 1.2 million jobs in the past three months -- and makes the appropriate conclusions about where the economy is headed. With consumers cutting back spending in the face of historically high indebtedness, tightening credit, and failing job prospects, there are very real risks that we are heading toward a depression. Someone needs to be bailed out, but who is it?
If the heart of the economy is the consumer, government's response should act directly to help the consumer. It's that simple, and Robert Reich's prescription is exactly in that direction, with this two-pronged approach:
First, the massive Treasury bailout of the financial industry must be redirected toward Main Street -- loans to small businesses, distressed homeowners, and individuals who are still good credit risks.
Second, a stimulus package must be enacted right away. It needs to be more than $600 billion -- which is 4 percent of the national product.
