Responding to some of the discussion generated by my earlier comments, I would be happy to elaborate. Keynesian spending schemes do not encourage more national income. They merely redistribute how some of it is used. The best thing that can be said is that they do not cause much damage beyond the displacement of resources that would be better allocated by the productive sector of the economy (see here for more information). The bailouts, though, are more problematic since they are causing great uncertainty, leading investors and entrepreneurs to sit on the sidelines as Treasury Secretary Paulson gyrates from one strategy to another. To the extent people think government intervention was necessary, policymakers should have copied the approach that was used during the S&L bailout. Bankrupt institutions were shut down and healthy institutions were paid to absorb them. This was not the ideal system, but at least incompetent management and shareholders were penalized and resources were shifted to those with more ability. Shifting gears, I agree that recessions are not necessarily caused by government, though every serious downturn in modern history (1930s, 1974-75, 1980-82) can be traced in large part to misguided intervention, with monetary policy often deserving most of the blame. Last but not least, the looming specter of higher tax rates adds to the misery the economy currently is experiencing.