Wall Street Journal: Surviving the Panic

For another clear-headed perspective on this week's bad economic news from Wall Street, check out today's editorial in The Wall Street Journal.

Despite dire predictions by Sen. Barack Obama that we're headed for another Great Depression, the newspaper writes:

The immediate priority is to calm markets and prevent a crash, and to do so it helps to recall how we got here. We are not living through some "crisis of capitalism," unless policy blunders make it so. Nor is this largely the fault of the Bush Administration, as Barack Obama claims, or of some lack of regulation, as John McCain asserts. These politically convenient riffs do nothing to reassure the public.

The current panic is the ugly aftermath of the credit mania that took flight in the middle years of this decade. As students of economic historian Charles Kindleberger know ("Panics, Manias, and Crashes"), financial manias throughout history have shared one trait: the excessive expansion of credit. This bubble was no different.

Read the full editorial, "Surviving the Panic," at the WSJ's Web site.