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So the madcap fun continues today, with the dow plunging 689 points. The NYT brings you all the grim details. I know in earlier posts I have suggested that the stock market reports were more distraction than main course with regard to this crisis- that was before they lost over a thousand points in one week. Were this rate of depreciation to continue, there would cease to be a stock market around mid-December, although probably people will all have pulled their money anyway if this goes on for another, say, three weeks?

It is tempting to leave this story alone for a few days. Following it over the course of a day that spans every time zone on Earth and trying to keep up with the increasingly arcane financial implications is becoming at least a part-time job. But the very speed of the thing compels attention- after the crash in 1929, it took the markets three years to bottom out. We don't have anything like that kind of time in 2008. If some sort of turnaround isn't found, the implications are becoming increasingly frightening.

And to the rescue- the Socialism pronounced so dead by Baroness Thatcher et al. The Western World, increasingly prepared to abandon any vestige of a free market at all, seems prepared to treat their economies as a matter of national security, and to pay any price, buy any asset, and insure any transaction, to restore market liquidity. W. even floated the idea of nationalizing the United States' banking system, if the British solution seems to work out. You should probably read that last sentence again.

Whatever we do, we had better do it fast. The rather odd news yesterday regarding the Russian financial bailout of the Icelandic state was, it turns out, due to a lack of reserve capital that had compelled investors to pull their investments for safer currencies. If you think about it, that could happen to an awful lot of places. Smaller economies around the world that peg their own money to reserves of dollars or euros could begin to fail - Iceland could be the canary in the coal mine. But a quasi-European canary. Who do you think is going to pony up to bail out Bangladesh? Sudan? Angola? How long would this list be if I typed the whole thing? And if you think this is mess now, wait until we have a hundred developing nations with Zimbabwean inflation losing the ability to buy food.

I heard a really interesting piece on the way home today, by Andrei Codrescu, pointing out that for $700b, we could probably have bought out every mortgage in America and installed a robust system of regionally dispersed wind power turbines. I wonder what we would have done with the $3-400b left over after everyone owned their own home powered by clean energy? Improved schools perhaps? Does it sound like communism? Yeah, a little. But when you start to think of the opportunity cost of the last two weeks...I mean, this thing is still pretty scary, as there's no end in sight, but it's also becoming so terribly sad, watching us sacrifice the resources that might have addressed so many of the dire problems of our generation on the altar of market liquidity.

* Update *

OK, upon examination of some numbers, it turns out that $700b would not even approach purchasing all of America's mortgages. I hope my larger point about opportunity cost still comes across.