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Why bailout may be the only saving grace

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Mortgages struggled to stay as low as 5.75 percent (more below on the stubborn refusal of mortgages to follow the Fed down). The biggest news of the week: the off-the-table January ISM survey (the ineptly renamed purchasing managers' association), one of the very best real-time indicators, the 54-to-41 plunge the worst monthly result ever. A general intake of breath followed, not yet released. January retail sales were the worst in five years; credit cards declined in use and increased in distress; and Wal-Mart reported, sadly, that shoppers are using holiday gift cards to buy necessities -- diapers, pasta sauce, and detergent. The only questions remaining: how deep and how long the recession? This one is different in pattern from others (save perhaps '91-'92 affair, a micro-mini crunch). By summer '07 consumers were stressed by energy and housing, but the economy was still rolling along when the August Crunch began to tip it over. Standard recessions are consumer-first, ...