The problem with a really big extended depression is that it means that oil prices drop way down. That is back to 40-30 dollars a barrel. That represents a very large tax cut and an increase in efficiency that goes directly to bottom line wealth of people. This was something that Reagan enjoyed in the early 80′s.

Alaska oil dropped below 50 today and international spot prices were about 54.

The Japanese didn’t start throwing money at zombie companies until four years after their meltdown. It can be argued that the big three US auto companies and AIG are zombie companies. But so far, my understanding is that much of the money spent has been to recapitalize US banks that had the best chance of surviving.

The bad news with lower fuel prices is that it lowers the incentives to get off dependence on foreign oil–while making it difficult for alternative energy producers to compete.