What is Robert Samuelson's complaint? The people who have heretofore purchased these securities will place their funds in various other sorts of instruments - bank deposits, corporate bonds, commercial paper, and equities which in turn will finance investment and the purchase of consumer durables. They will also place them in Treasuries, municipal bonds, and municipal paper, which is a good thing too given the size of the deficits governments are running. Lenders and investors will have to scrutinize projects more severely because they cannot pass the trash to the purchasers of securitized debt. Given what has happened, are we supposed to believe this is a bad thing? Some of your libertarian colleagues (e.g. Arnold Kling) find the secondary mortgage market (and thus securitization) has been a giant exercise in rent-seeking and are hoping it dies a natural death.

Yes, people will find ways to invest safely, as long as they have money or as long as their money is seen to have worth. Two things, people are spending money as if it had no value. Perhaps it doesn't. The other thing is that if our government comes to be seen as the only safe investment left and we sink our money into it, what does that produce? If government is spending money to help the people, those things government spnds money on may, may, be beneficial, but they are not profitable, or someone other than government would be building/doing them. So we invest in government, which spends for us on good/bad things that do not increase aggregate wealth. Is that good?