MoneyWatch is sponsoring a "blog war" between the well-respected economists Brad DeLong and Tyler Cowen, a liberal apologist and a Hayekian libertarian respectively. We here particularly admire DeLong's capacious historical knowledge, which outstrips even your most curious economists by a city mile. But what caught our notice is DeLong's initial entry in the debate, titled "The Stimulus Package: Like the Housing Bubble, Only Better," in which he argues that the Paulson/Bernanke/Geithner sequence of EESA, TARP, ARRA and especially PPIP should be understood as, effectively, rebubbling of the economy — which, he does more than imply, is a good idea because prior to the crisis, bubbles were pretty much all that was driving the US economy.
The novelty of this description is lost on us, exactly because this simply rehearses our analysis of six months ago, under the heading "apocalyptic capitalism":
There is perhaps something to be gained from recognizing the bailout as yet another credit bubble: money from future work to be made available now, but this time without even the choice to take out a mortgage or take home a flatscreen TV....Of course, the apocalypse bubble is far more than $700b now. What is most vexing about DeLong having eventually understood this crucial element of the structural nature of the crisis is that he still shies from considering its historical implications. And though we have absolute faith that he makes his calculations with the welfare of real persons in mind, he arrives at mistaken conclusions because he is unable to locate the crisis systemically: as one driven by a dynamic that moves toward crisis with the same motion that immiserates the vast majority of its participants. And so he can only imagine what are essentially pro-cyclical solutions, and thus finally pro-misery as well.None of this can answer the question about what will be made, sold, purchased within the real economy as it is abstractly mortgaged against this present loan. More commodities, more houses? Ironically, what is on offer this month is apocalypse itself. Or rather, safety from it. We are getting nothing for 700 billion but promised protection against the threat of systemic failure, a threat issued hour by hour on the news, by politicians and economists. We are made to purchase the very insurance Mackenzie discusses, but may sell nothing onward. Apocalypse is merely capitalism’s last new line, the latest in use value, though we are compelled always to imagine that it comes from somewhere else, is someone else’s idea…