Interesting Pearlstein editorial today

By LindaBeth

Today's column by Steven Pearlstein in the WaPo puts the "goodness" and "badness" of government debt in perspective, and it is an interesting read:

Don't get me wrong: The fact that households and businesses and banks are deleveraging and beginning to live within their means is a good thing. But it would be even better if everyone weren't doing it all at the same time, because the effect is to badly undermine consumer and investor confidence and raise the risk that markets will spin out of control and overshoot on the way down just as they overshot on the way up.

And that's where the government comes in. For if the government is increasing its borrowing, its spending and its lending at the very moment that everyone else is cutting back, it has the salutory effect of slowing down and smoothing out the adjustment process, reducing the risk of a vicious downward spiral that leads to a decade-long depression. Let the private sector adjust first and get itself back into balance. Then when the economy begins to grow again, it will be the ideal time for the government to deleverage and put its financial house in order.