We are facing the abyss.

Even if Paulson's package does get passed by Congress, there is still a chance that our financial system will fail. As President Bush described the risk :

More banks could fail, including some in your community. The stock
market would drop even more, which would reduce the value of your
retirement account. The value of your home could plummet. Foreclosures
would rise dramatically.

And if you own a business or a farm, you
would find it harder and more expensive to get credit. More businesses
would close their doors, and millions of Americans could lose their
jobs.

Even if you have good credit history, it would be more
difficult for you to get the loans you need to buy a car or send your
children to college. And, ultimately, our country could experience a
long and painful recession.

He calls it a "recession", but it sounds more like a "depression" to me (he didn't even mention the issue of demand contraction).

Americans are scared about the economy. They are trying to figure out what went wrong, and how to protect themselves. This is exactly the time when economic radicals have a chance to make their case. So please, take this opportunity to make your case.

So far, the debate has been limited to a few groups who basically support the economic status quo. Their responses are summed up as:

1. Markets are prone to abuse: They'd establish greater government oversite, as a matter of course
2. Government distorts the market: They'd remove institutions that obscured the basic problems.
3. People make mistakes: They look at this as a more general learning experience that reveals the need for adjustments to both regulatory and private decision making.

Their shared perspective is that they want to maintain the basic structure of our financial and economic system. However, some of us believe that the basic structure is inherently crisis prone, and none of these status quo solutions will do anything more than buy time. From that perspective, what I want to hear are proposals to change the basic rules governing our financial and economic systems. If you support any of such proposals, now is the time to write it up and spread it around; if radical proposals can't gain any traction over the next few years, then they won't gain any traction in our lifetime.

So here's my challenge to radicals: start making proposals for basic legal reforms or new economic institutions that regular people can understand, and make an argument for how these reforms will avoid future economic crisis. These proposals should describe the mechanism by which wealth will be allocated to high-return investments (the basic needs for a productive life among them) and how these reforms will protect us from society-wide crises in the future.

If you know of any such proposals, please refer to them in the comments. I am generally familiar with proposals from "the libertarian left ", but am not aware of anything that would specifically address the current problems.

Radicals, this is your chance: get ready!