Rich Lowry just reported at the Corner that a major conservative economist has told him that there really is a chance for this to turn into a major depression a la 1933. If so, it’s mostly psychology. Ninety-three percent of home loans are still good. There’s an incredible amount of cash floating around the world. It’s just that everybody is afraid to lend what they have. A government bailout will only exacerbate the bad psychology by undermining confidence in the markets’ ability to muddle through on their own — or at least without MAJOR government action. Yes, government can and ought to do some things right now to stabilize and re-start the markets. But all of this business of buying up non-performing assets is counterproductive. Conservatives like Hensarling and McCotter are right to press for alternatives, and right to vote against the package as it has been described.