In the latest episode of the financial drama “Credit Crunch,” the President, the Presidential candidates, and congressional leaders from both parties gather in the White House to agree on a seven-hundred-billion-dollar bailout for the very financial firms whose greed and recklessness created the crisis. George W. Bush, perched between Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, is wearing a grim expression. Barack Obama also looks grave, but John McCain, who pretended to “suspend” his campaign before rushing back to Washington to help “solve” the crisis, is grinning broadly. Off camera, House Republican Leader John Boehner is threatening to sink the deal.

As political theatre (“If money isn’t loosened up, this sucker could go down,” Bush declared at one point in the White House meeting, according to the Times), the wrangling over the Wall Street rescue package is engrossing. As an exercise in crisis management, it is potentially disastrous—and, to the rest of the world, dumbfounding. Willem Buiter, an economist at the London School of Economics, who has served on the Bank of England’s policymaking committee, said in a blog entry last Thursday that unless Congress acts now “the freeze of the financial wholesale markets will intensify and the attacks on financial institutions will resume, first in the U.S., then in the U.K., then in the rest of Europe and soon after everywhere in the financially connected world. . . . Instead of a mere recession, there will be a long and deep depression.”

Some experts dispute the Bush-Buiter analysis. One school argues that the financial system is a mere “veil” wrapped around the rest of the economy. Strip it away and other business activities—the development and marketing of new products; families buying clothes and going out for meals—will go on unabated. If a bank that was performing a valuable function fails, another will spring up in its place.

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