No, not the stimulus. Another monster bailout on top of the stimulus. If the timeline here is right, Team Barry could be asking for it by mid-February, which would mean the $700 billion in TARP I lasted … five months.

Ever get the feeling like we’re just buying time?

[P]ersons close to the situation in Congress told Politico that the deteriorating economic situation leaves little breathing room. Bank losses are up and auto sales down. A top Hill staffer predicted Obama could be forced to seek more money even before the President’s Day recess in mid-February.

If so, this would be a nightmare political scenario for the incoming administration, which has focused on using the next month to muscle through its economic recovery plan…

But Obama gets one honeymoon as a new president, and waiting is not without risks. Financial newspapers reflect a growing concern that the government must do more to buy up the bad investments that hang over financial markets; with more bad earnings reports due this week, there is sense that this is a crisis that can’t be avoided…

“Congress isn’t going to step up and say, ‘Hey, can we give away another $700 billion?’” said an aide to a second Democratic House member. “But there’s a growing sense among people who are really watching this closely, I think, that it is entirely possible, six months from now, maybe even less, the administration is going to come back and say, ‘We need more; we need … more of the same.’”

Nouriel “Dr. Doom” Roubini runs the numbers and predicts that total credit crisis losses could reach $3.6 trillion; the U.S. banking system only has capital of, er, $1.4 trillion. Tony Blankley, never known for his fondness for big government, ponders the implications and bites the bullet:

[E]ven many important conservative, free market economists – including some of President Reagan’s top economists – believe we do need a very big fiscal stimulus a la the 1930s and 1940s. And here is where it gets even more confounding. Maybe a trillion dollar deficit is too small. Most economic historians believe that the Great Depression did not end until World War II because only then was the deficit spending big enough to fully replace the lack of private sector economic activity. FDR was afraid of big deficits and didn’t spend enough to end the depression sooner…

So, if the Depression-WWII theory is to be followed, next year’s deficit should not be a paltry $1 trillion, but rather about $2.5 trillion (in order to be about the same percent of the GDP as the World War II deficits were). At a mere trillion, we may be spending enough to badly inflate the currency without spending enough to lift the economy.

Exit question: How much for TARP II, do you think? Another $700 billion or do we go for a cool tril this time?

Tags: Barack Obama