Marc Ambinder says that Obama's economic team is heading for the bunkers...

It's quite unsettling to talk to members of Barack Obama's transition teams these days, especially those who are helping with the economics portfolio. Without going into details, the sense I get from them is that they are very worried that the economy will get a lot worse before it gets better. Not just worse... a lot worse. As in -- double digit unemployment without the wiggle factors. Huge declines in aggregate demand. Significant, persistent deficits.

... and this post by Dan Drezner may help explain why:

1. Credit markets have yet to really unfreeze, because the underlying problem -- putting a price on a lot of toxic debt -- has yet to take place;
2. It's going to take some time for trust -- a vital public good -- to return to global capital markets;
3. The crisis has done nothing to unwind the global macroeconomic imbalances that contributed to the asset bubble in the first place -- if anything, the crisis has temporarily reinforced it;
4. There is a very dangerous prisoner's dilemma game brewing in the interplay of fiscal expansion and trade policy. Unless export engines like Germany start to signal that they'll prime their pump as well, you're going to start to see some nasty protectionist attachments to any new government spending;
5. Fiscal expansions are going to take a long time to kick in, and the ones being proposed are not necessarily conducive to countercyclical boosts.
6. Beyond the fiscal expansion, this crisis is going to result in a lot more state intervention in the economy. Given what's happened, it would be intellectually dishonest of me not to acknowledge that some of this intervention will be necessary. A lot of it, however, is going to be misguided and stunt long-term growth.

Ambinder's larger point is that an economic downturn - woeful as it is - is nothing compared to the risk of failed, potentially nuclear rogue regimes. Which gives me the perfect opportunity to dump this NY Post article that I've been saving since before the election. The phrase you're looking for is "failures produce catastrophes." Which is actually the optimistic part of the article, before the parts about nuclear terrorism and spiraling great power conflicts.

As a sort of PhD student in argument I don't want to sound partisan. Obviously everyone had a hand in this train wreck. And as someone who lives in LA I don't want to seem ungrateful. Gas prices are pretty awesome right now. And as a rule I want to avoid the impression of shrillness. But did the Democratic Party just allow their unfettered political corruption - insulated by a combination of vapid multiculturalism and aggressive race baiting - to detonate the Western financial system and risk multiple nuclear wars? Because it kind of seems like that could be the case.

References:
* The First New Foreign Crisis [Ambinder]
* I think the World Bank is being optimistic [Drezner]
* BANKRUPT ROGUES: BEWARE FAILING FOES [NY Post]
* NRCC Ad: Naming Names [Ace]
* A great example of how we got to the credit-market meltdown [Hit Air]
* Video: Democrats insist "nothing wrong" at Fannie Mae, Freddie Mac in 2004 [Hot Air]

Previously:
* Mideast Muslims: Financial Meltdown Is Allah's Punishment
* Global Investors And Economists Reacting To Obama Election With Total Meltdown (UPDATE: Moran: "Simplistic Notion That People Who Have Wealth Are Entitled To Keep It")
* Liberals Slowly Realizing That Obama Was Serious About His Disastrous Economic Proposals