Giving Credit where Credit is Due

I took the liberty of cutting and pasting this comment from an MSN feedback space. The writer was responding to the MSN journalists' assertion that TARP participating banks' continued cautionary lending practices were necessary and for the best.

KOJAK41#8
Thursday, April 23, 2009 1:04:46 PM
Kenyes said that trying to end a depression by giving money to banks is like pushing a string. Businesses invest and banks lend not because they have money, but because they see a demand for their products on which they can earn a profit. You have to stimulate demand to get the system going again. Of course you also have to make sure the banks are still there to make loans and cash consumer's checks, but restarting demand is the key.
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OK, good, start demand. That sounds good to me, for whatever it's worth coming from someone who took up 9 credits of economics. It sounds like the President has that end in hand too.

But what about the demand that's being wasted because applicants for loans are being turned away? Another respondent likened the banks' behavior to the bad guy in Total Recall turning off the air so all the Martians suffocated.

Oh, what to do, what to do. I wish I were smarter than I am, and I'm glad some people are smart enough to fix things.

I'm also glad that the economy is something seeded within our species that will naturally reassert itself despite vicissitudes. After all, even feudalism didn't kill the economy, because an economy was right there in place for Renaissance merchants to pick up and improve on when the time came. A few robber barons won't get the best of us if a slew of feudal lords couldn't.