How do you end Wall Street panic? Step one: Don’t panic

The essential prerequisite to ending a panic is to stop panicking. The mantra of “how dreadful things are and how much worse they are going to get” is only of limited utility. (Though it needs to be repeated on Wall Street where people seem to be sitting around waiting for things to return to “normal” — much like those Japanese soldiers who were found long after the end of World War II, still fighting on behalf of a Japan that no longer existed.) 

The next steps are clear:

1) Mark to market was a mistake and the system can’t be fixed until it is eliminated.

2) Bad assets need to be taken off the books of banks, but the deal by which it is done should enable time to be taken to get the best price for those assets.

3) Capital should be made available to banks at good rates if they commit to pumping it into the markets.

4) The stimulus should, um, stimulate: capital to segments of the economy that will create jobs, tax incentives to businesses that invest in jobs, maybe a temporary payroll tax holiday, lay the groundwork for sustainable growth on the other side (green energy).

5) Don’t borrow a penny that you don’t have to.

6) Congress needs to stop thinking this is the only spending opportunity they will have during the Obama years.

Spencer Platt/Getty Images