Brad DeLong made an impassioned argument to encourage banks to buy back equity warrants in order to boost equity capital in the system. Should the recession continue over the next few years (which is a distinct possibility, DeLong pointed out), we'll be desperate for the banks to have more equity, not less. The Obama strategy of TARP management, naturally, doesn't quite jive with this—as DeLong acknowledged in his post.

Paul Krugman offers a crash course in macroeconomic theory, explaining the "paradox of thrift." He describes a feedback loop in which "people try to save more," but "the nation actually ends up saving less." That because an increase in savings means a decrease in spending, which in turn triggers a recession, and leads to a further overall decrease in incomes and saving and consumption. Rinse, repeat, and watch the economy go down the tubes. What's the upshot? Quit complaining about the government's budget deficit, suggests Krugman, because the increase in government spending is keeping us all from taking a much longer, much deeper bath.

Barry Ritholtz delighted in David Rosenberg's Squawk Box appearance today, applauding the economic strategist's bold truth bombs (he also supplied this video of Rosenberg's segment). Among the non-cheerleader-esque assertions Rosenberg made were: a) the consumer will not fix the economy, certainly not anytime soon; b) the unemployment rate will continue its phenomenal rise; and c) believing that green shoots have arrived is dumb. At this point, picking on CNBC makes me feel like I'm wielding a pitchfork—that being said, I think Ritholtz was well within his rights to congratulate Squawk Box on "two consecutive days in a row of quality television."

Felix Salmon continues his diatribe against labeling credit-default swaps (a fancy financial derivative) as insurance and, more importantly, regulating them as such. His argument picks up speed with a nitty-gritty picture of how two banks can enter into a deal to magic capital requirements (cold, hard cash underlying a loan) off their balance sheets: They powwow, guarantee each others' loans so they can repackage them as "insurance," and then reap the benefits of carrying the higher risk but less-stringently regulated asset class on their books. But beneath all the smoke and mirrors, securitized loans are still loans, argues Salmon, and should be managed and policed in kind.