My opposition to any explanations of why "stimulus" will work
Megan McArdle pithily sums up what so many seem to be avoiding thinking about:
[T]he actual empirical evidence that massive government spending can shock an economy the size of ours into a permanently higher level of output is . . . well, it's sort of hard to find a wittily apt description of something that doesn't really exist.
There's a lot of solid Keynesian theory that says it will be so. But not that long ago we had a lot of pretty good theories from very smart economists about how this sort of financial crisis couldn't really happen again in the first place.
And, that, to me, is the crux of my skepticism (some would say cynicism) about a major government stimulus package. Yeah, theory says it will work. But, theory said we wouldn't get here again, anyway.
It's like using a geocentric theory to predict the solar orbit of a newly discovered planet. Before you can get me to pay any attention to how good your theory is at predicting this orbit, you need to explain to me why your theory was wrong about the existence of the object in the first place.
I mentally "turn off" any economist I hear talking that does not begin with something along the lines of "clearly all our theories were wrong, so we're having a lot of trouble coming up with an explanation for the current crisis that isn't just a guess." Anyone who thinks they know what caused this crisis (much less how to fix it) is simply deluding themselves. We might have an idea in twenty years - but I think there's a growing feeling (at least among the libertariany economists I tend to read) that we were wrong about thinking we understood the Great Depression, too.
I know "do nothing right now because we might make it worse" isn't going to be a popular message for politicians (or economists!) to deliver. I understand, in fact, that no one of any note is going to deliver that message. Sadly, I think it's the the best course we can chart now with the data (and theories) we have.