As a physician, I’ve been struck by how much our nation’s discussion of economic matters has started to resemble how we talk about sick patients.  To see what I mean, just read the following fable:         

     The doctors, a large team of the best experts and thinkers, entered the room.  The nurse was already there, a nurse, her face filled with concern.

    They had all had been worried for a while now, as the patient had been hospitalized over the past 18 months. That length of time was unusual in this day and age, but this was on ordinary patient.  All you had to do was look at the name affixed to the chart:   

• Name: the U.S. Economy
• DOB: 07/04/1776
• Diagnosis:  Deep Recession; Rising Debt, Bankruptcies, Unemployment & Foreclosures, Diminished Consumer Confidence and Spending, Irresponsible Lending and Behavior, Absence of Regulatory Safeguards
• Prognosis: Guarded

  The Ailing Economy laid in bed, its pressed pinstripe suit and Windsor knot replaced by a tattered hospital gown and plastic wristband.  Gone were it’s connections to CNBC and the Nasdaq through its Blackberry; the only thing it was connected to now were IV bags of fluid and medicine. 

 It had all started with an exposure to some Toxic Assets.  At first, there were only mild symptoms—a foreclosure here, a distressed bank there—and then in early 2008, the symptoms worsened and claimed its first big victim, Bear-Stearns.             

 Suddenly, Wall Street’s temperature rose, a fever set in and the contagion spread.   One night, suddenly and unexpectedly, the legendary Lehman Brothers just keeled over and died the burden of Toxicity too great for the doctors to handle.           

  Nevertheless, the doctors were shocked at as to how fast the patient had started to decompensate.  Just months before, the Economy had been in the best of health, its fundamentals strong, its vital sign around 14,000 points.  Credit circulated easily through its arteries and veins.

But then, without warning, everything changed, its once pristine credit markets had become Clogged.  Money just stopped flowing and all of its vital sectors--brokers, car buyers, home owners, big and small businesses—were choking for want of it. 

The Economy’s vital signs behaved erratically—dropping 500 points one day and rising 300 points the next, only to drop again the next day.   What was the meaning of this madness? 

So far, the only Prescriptions that helped at all were strong infusions of cash to stabilize it.  Each time, however, they had to raise the dose higher to get the same effect.  That had managed to keep AIG and Citi alive up to now, but one had to wonder when the Side Effects of all that money—inflation—would outweigh the benefits of the treatment.

Shortly after the New Year, the doctors had a long discussion.  Some argued that that a Prescription for a broad-spectrum stimulus was called for.  Others felt that a more careful approach, targeting Rx’s to certain parts of the Economy, was a more thoughtful approach.  Still others, frustrated by the time and money needed to keep the patient alive, thought it was time to withdraw care and allow the patient to recover on its own.In the end, after much debate, the doctors decided to continue aggressive treatment with a large, broad-spectrum stimulus plan.  However, the doctors also knew that they wouldn’t be able to save all of the patient’s parts.  They proposed a Stress Test to figure out which ones were Viable. 

 Still, the patient continued to deteriorate, its vitals bottoming out at near 6000. 

As the doctors continued to fight, they realized that the Economy hadn’t been totally honest with them.  Behind the top-shelf façade laid some very unhealthy choices, excesses and risky behavior that were harmful to its Health.   It had lent tremendous amounts of money to seedy customers.  Like a junkie, it had spent the better part of the last decade binging on derivatives and credit default swaps. 

The doctors also shared some of the blame.  They hadn’t been very good at making sure the Economy came in for regular checkups and screening tests. They hadn’t told it to Regulate its dangerous appetites.

Lying there, ashen, febrile, and weak, the Economy wondered if the doctors would come through for it.  Would infusions of cash, prescriptions for stress tests, stimulus packages, and shocking it with a TARPs and a TALP jump start it? Was there a way to purge its system of these Toxic Assets? 

The doctors gathered around the bedside to talk to the Economy They had attempted to say and do the right things for the patient.  All of them had Taxed their wealth of intellect and experience, dug deep to find an answer. They put on their most optimistic faces and voices. They told the Economy to expect some signs of recovery in the later half of the year. 

But the Economy still lay there, quiet, despondent, and uninterested in the medical team’s further reassurances.

Should they call Psychiatry?  They decided to wait until they were more certain the Economy was Depressed.