Serious recession, but 1982 levels, not 1930's for the US. Some form of the bailout passes. How bad it is depends a lot on whether they get it done quickly (worse) or if the Repubs try to have their cake and eat it, overplaying their hand. The top remaining US financial companies survive, with the possible exceptions of MS and Wachovia. Obama announces a major infrastructure bill plus tax cuts for the middle income folks. Deficit skyrockets, but the Chinese largely keep paying cause they don't want to write off their reserves. In Europe - two tracks. On the one side the bubble economies (UK, Ireland, Spain) plus possibly Italy get the US style really nasty recession. The rest, led by Germany and France get a mild one. The dollar slides but doesn't crash. Commodity prices stabilize or fall as demand destruction caused by high prices and the recession balance out supply issues. The world muddles through.
I think the big risk to this rather benign outcome is, as we discussed above, the junkyard dog of the authoritarian-evangelical weapon crafted by the right to aid them in their agenda. It's slipping it's leash. Capitalism searches out the darkest corners of human potential, and mainlines them.
