I used to think the same way. If you do some reading on the Great Depression you see that Herbert Hoover had the same "hands off" approach to the situation. He figured just as you do that companies will fail and others will form in their place but it just didn't happen. Banks were failing and no longer able to give loans for the start up businesses, and as a result the recession deepened. Herbert Hoover was actually known as a great humanitarian in the pre-depression days. There's some interesting reading there.
Anyway, as much as I hated the 700 billion stimulus plan at first, I'm now certain it was necessary and I think more bailouts will be needed in the coming months. The only question is when do we stop? I really don't know.
I think in February there's gonna' be another dip in the stock market when commercial real estate starts to tank. It has nothing to do with Obama but more to do with the lousy Christmas season most retailers are gonna' have. The quarterly reports come out in the end of January, begining of February and I'd bet they aren't gonna' look good. Big retailers are gonna' declare bankrupcy and/or ask for bailout money which may dwarf what we are seeing now.
What are some of the things us little guys can do? Start paying off as much of your debt as you can, credit cards first, autos and mortgages next. I wouldn't worry about student loans too much as those are normally very low interest. At least mine were.
So stop spending and start saving more. Go out to dinner and movies less, take local vacations. But unfortunately the very behavior that will insulate you from the coming recession will actually worsen it!
I understand your point but, back in the day the world was a much bigger place, people were isolated compared to today. We didnt have the financial instruments we have today or the laws that make them legitimate/enforcable. Nor did the country have the wealth we have today.
I think its a whole different ballgame. Actually, I believe Hoovers ideas would be more applicable today than they were back then. I know for a fact that theres enough money (private equity) in this country to keep the US from going into a depression. Putting that money to work could really make a difference. If that money had something to invest in, it would invest.
All IMO, as usual.