Crap Sandwich with Cream

Well the bailout package finally passed. Loaded up with lots of unrelated goodies. Will it end the credit crunch and improve market confidence? In the short run it had better, or otherwise the whole thing was a complete waste of time and money. I suspect it will have some short run benefit. But in the long run it doesn't fix the real problems, which are:

1) Legislative meddling in free market processes for setting credit prices and policy for sub-prime borrowers. The Community Reinvestment Act is but one of the culprits. That law needs to be abolished, and Fannie/Freddie need to be privatized.

2) Fast recapitalization is needed for banks and financial firms. Many economists (even Paul Krugman) agree with me on this one! It's starting to happen, but not because of the bailout and probably not fast enough. Even Europe has to do this, proving that it is not just a US problem. 

3) Corrupt Democrats: Here at least, Barney Frank gets held to account by his own words. No matter how hard he tries, he can't spin his way out

I think this article has it right. Ultimately it is a failure of leadership. There has not been an effective national debate on whether oil prices should be high or whether home ownership is a right (as opposed to an opportunity). It is going to take time to unwind all this, and a new kind of leadership (and not the Obama/Biden socialist facism kind!!!)