The BBC suggests that they will try some more creative monetary policy, ie, quantatitive easing. It will be interesting to see how this pans out. If it is successful, I wonder if people will stop clamouring for fiscal stimulus? I highly doubt it. Apparently, Rahm Emmanuel has said this:
“You don’t ever want to let a crisis go to waste: it’s an opportunity to do important things that you would otherwise avoid.”Greg Mankiw (above link) reads this as an ominous warning for supporters of limited Government. However it is unclear whether he considers himself among them, having been an economic advisor to a President with a record of highly expansionary fiscal policy.
That is probably a bit unfair. But I let my point stand about quantitative easing. If it works, I predict no backoff in arguments for fiscal stimulus, especially from those interests most likely to be 'stimulated'.
If it doesn't work, then said proponents can probably justifiably up the ante on their pleading.