If people understood how bad the financial situation is, there would be less hostility toward the bailout, writes Steven Pearlstein in the Washington Post. Americans haven't owned up to having helped create the credit bubble that is now deflating, and Wall Streeters haven't owned up to their "greed, arrogance, and incompetence," either. Because of that standoff, we're all about to see just how deep a hole we are in.
"They'll come to understand that the giant sucking sound they hear is of a massive deleveraging of the global economy and the global financial system," he writes, "as households, governments, businesses, and investment funds adjust to living in a world with less debt and more inflation." Then maybe they'll come around to seeing that the only solution is for governments around the world to "effectively nationalize large swaths of the financial system so it can be restructured, recapitalized, reformed, and returned to private ownership."