It may be time to buy Gold. While the precious metal is at all time highs, some highly intelligent commentators see us staring at the abyss:

Willem Buiter, a highly distinguished economists (now chief economist at Citi) believes Europe need not Euro 1 trillion, but Euro 2 trillion in tarp money. Here is his line of reasoning.  I thought it was fitting when I heard the Euro 1 trillion package referred to as "Wundertuete" or "Grab Bag" since no one has any idea if/when/how or how much a country in need could procure from that fund. Paul Krugman thinks Obama's TARP 1 was too small a similar line of reasoning has been proposed byBrad DeLong. If all that money is indeed needed at some point to pull the economy out of the ditch, government debt is going to skyrocket. If these commentators are correct, we're between a rock and a hard place: debt or depression.

On the lighter side, the alternative is to listen to Ed Prescott (also a very intelligent economist, in fact, a Nobel Laureate). He proposes the view (called Real Business Cycles) that business cycles and indeed great recessions or depressions can be modeled as technological retrogression (people forget technology). Sounds strange, I know, but that's just the beginning (via Stephen Williamson):

"Ed Prescott did pathbreaking work in the economics profession, and his Nobel prize is well-deserved. However, I doubt that there were any people in the room yesterday who took Ed seriously. Ed's key points were: 1. Monetary policy does not matter. 2. Financial factors are the symptoms, not the causes, of the recent downturn. 3. The recession was due to an Obama shock, i.e. labor supply fell because US workers anticipate higher future taxes."