"It's not smart to say this economy can't recover," says economist and author David Smick. If the pipeline of credit is somehow unclogged, the Federal Reserve has provided plenty of money for there to be a quick recovery. Americans will eventually need to buy houses or cars again.
Clearly this is what President Obama hopes and expects. It would probably solidify eight years of political dominance. But there is one problem. The markets do not appear to find his economic approach remotely credible. "What we are seeing," says Smick, "is $3 trillion in revenues for $4 trillion in spending. An honest budget? Give me a break." Even more important, the markets have little confidence in the administration's sketchy bank bailout plan. It has been the largest, early mistake of the Obama presidency to focus on expensive reforms of health and energy before convincing markets that the financial sector will be fixed -- the achievement on which all else depends.