Hoisted from Comments: Robert Waldmann writes:
Grasping Reality with Both Hands: DeLong: Reply to Luigi Zingales: Brad 2 heads ups:
you can't write "insolvent (at least temporarily)" you have to write "insolvent (or at least illiquid)." Don't ask me why.
Be careful when you use the word "trust" around Luigi Zingales. Trust me, he has thought a lot about trust. It is different from risk tolerance. Perceived risks have increased. Willingness to bear risk has, for all I know, increased too, but not enough.
There seems to be an Italians in the USA consensus that one can argue against the stimulus by arguing that it isn't, in itself, the optimal policy response. Now to me it makes no possible conceivable sense to say "the stimulus debate is a distraction from the debate we have to have, so, after the bill has been passed and signed, I will reopen the debate to argue that it is a distraction." I mean if the [stimulus] debate is a distraction it's time to "mettere una pietra sopralo."
Time to bury it underneath big rocks? Isn't it also time to put a stake through its heart, cut off its head, and stuff its mouth with garlic?