The kind of debt / income ratio we are sustaining now is similar to that post WWII. But then, we were coming off of a war, and bringing idled or misallocated capital, raw material and labor resources (because they were making things that were meant to be blown up had no long term value to the economy) back to the a productive economy. This time, however, we have run up this debt in a civilian post Cold War context, and don't have new additonal resources that will come on line to pay down the debt.
Debt levels are problematic; that much should be obvious. Government action, to the extent it becomes necessary should be focused to promote economic growth, and alleviate the credit/bad debt crises with the minimal government involvement possible. The $700B rescue/bailout bill is a bad plan, especially with all the additional pork the senate decided to include. At a minimum, a reform should be included that would (1) repeal the CRA or major portions of it, (2) repeal S-OX or major portions of it, (3) overhaul Fannie Mae, Freddy Mac and other GSE’s and bring them under the same level of oversight as other private firms so they are not allowed to cause this kind of financial crisis again, (4) eliminate or overhaul the mark to market rules that exacerbated the paper losses and undermined the stability of the financial markets, (5) drastically reduce or eliminate capital gains taxes.
By the way, for future reference, if you are going to call people “clueless” and “idiot” and use other such invectives to say they are wrong about something, you might want to make sure you do two things first: (1) make sure you understand what it is they are saying in the first place; and (2) make sure that you use something at least close to the correct terminology.