We are weeks into the "biggest economic disaster since the depression" and we have no clear path out of the mess that Carter planted, Clinton watered, and the 109th/110th Congress has allowed to grow.  It appears we have no choice but to reap what has been sown, and I am not very confident McCain can get us out of this mess, largely because the congress is under Democratic control.  I am certain Obama will make it worse.

One thing that could be done is to replace the unified power that Paulsen enjoys with that of a counsel of economic experts.  Any reader of Forbes knows that they have long been calling for the break up of Fannie and Freddie, most recently in the August 11 issue.  Holman Jenkins of the Wall Street Journal advocates a similar course of action in a pre-bailout article; "With Fannie and Freddie on the ropes politically, let's put them on a path to privatization and liquidation."  He goes on to say "...putting the Fed in the job of helping to regulate them...would just be to put monetary policy at the service of propping up yet more financial services companies.  This is not a policy for financial stability..."

Of course, with hindsight, this is exactly what happened.  There are numerous examples of economic crises throughout American history where letting badly run businesses fail has caused temporary problems, but ultimately long term stability returned within a year to 24 months.  One example of where government intervention only made the situation worse by bailing out failure was the decade long depression of the 1930's.  Here we are 79 years later and the same tactics are being applied again.  It was Albert Einstein who said that insanity could be defined as doing the same thing over and over again and expecting different results.  What is it when you know the action is going to fail but you do it anyway?  Is that insanity, stupidity or arrogance?

I agree that something had to be done to fix the problem of liquidity in the market, but I think that there were several free market solutions that could have provided the same relief that the bailout is intended to provide, without the debt for which we the people are now responsible.  In the end, Chris Dodd led the pigs to the trough and the feeding frenzy ensued.  Republicans made an attempt to try a different approach, but the steamroller was in motion, and they perceived that the only way out was through...and now we have no choice but to go along for the ride.

Would we be better off if the people developing the plan were financial experts rather than politicians?  Almost certainly, but for this opinion to be right, things have to get a lot worse for us living in the real world outside of Washington D.C.  For once, I hope I am wrong.

All the talk of the bailouts in the news lately has me thinking back to several articles I've read in Forbes.  The problem, aside from people borrowing things they could not afford to pay back and realtors and mortgage brokers all too willing to push people over that cliff, is that the Fed has allowed too much money into the financial system in the guise of keeping inflation down.  This has devalued the dollar, reduced the value of everything, and really contributed to this mess.  And now we want to entrust $700 Billion to the same people that got us into this mess in the first place - without them presenting a plan as to what will be done differently this go round so we don't have another bailout next year.  I don't think that sounds quite right.  On top of it all, this has the far left saying out loud "See - we told you that capitalism doesn't work!"  Argh!

New Gingrich has proposed a plan in 4 steps below (full story here):

1. Eliminate the "mark to market" accounting provision which is driving companies into bankruptcy unnecessarily.
   
2. Repeal the Sarbanes-Oxley law which failed in every case this year and which burdens new companies with a $3 million-a-year accounting fee.
   
3. Join China and Singapore in eliminating the capital gains tax and watch money pour into the system from private investors at no cost to the taxpayer.
   
4. Pass a strong energy bill to return at least $500 billion a year in energy money to the United States.

If congress really wants to get us out of this mess, I think they'd better take a look at these 4 things - particularly 3 and 4 - before signing off on a what will surely become a bureaucratic boondoggle that will only stifle the system and lead to more financial ruin down the road.