There seem to be two kinds of economists in today’s world.
Keynesians and Austrians? Freshwater and saltwater? Macros and micros? Voodoos and uh well-adjusted?
No. These may be valid distinctions ordinarily, but in today’s debate on how to solve the great self-inflicted wound known as the credit crisis the only two that matter are those who’ve worked for prop trading outfits (or perhaps more broadly, those who would someday like to once their time of public service is up) and those who just practice economics, typically academically.
Among the former, the solution is uniformly, as Mish so memorably put it, “to patch the busted dam with water” and to do it now or the consequences could be incomprehensibly bad.
Among the latter, the views are many and divergent, but they at least agree that throwing trillions of dollars about is a serious bit of work and should be undertaken with deliberation, transparency and a long view.
I’m not qualified to opine on which type of economist has a better chance of saving us from ourselves. But I can observe that the only kind sitting at the decision-making side of our president, pre- or post- January 20th 2009, is the prop trader.