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Not to drag this up again, but I just read something I found very appropriate to this discussion on Michael Pettis' blog.

"...asked “So should the government do nothing? Doesn’t it have to do something?” (I am paraphrasing).

Of course it does, and I am not criticizing it for making stupid moves. As I argued on the program, the government is faced with a tough choice between measures that boost employment and spending in the short term but may exacerbate China’s difficulties over the longer term and measures that speed up the pace and quality of China’s transition but may result in unacceptably high unemployment in the short term.

They seem to be doing the former, and I cannot complain or criticize since this is a political decision and not an economic one. The point, however, is that the paths facing China are not one leading to economic contraction versus another leading to economic recovery. The paths as I see it lead either to a very deep, short-term contraction followed by a healthy and balanced recovery, or to a slow contraction that may take many years and may result in much slower productivity growth over the next decade or so – perhaps we could call it a US-style crisis versus a Japanese-style crisis."

So I think what Uday was saying about having to take care of those severely hurt by this downturn is correct, but I also agree with Anurag that we need to remained focused on the problems that got us here so we can fix the fundamental problems and hopefully prevent such drastic downturns from happening again (we'll never be able to halt all downturns).
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