Thanks to all those concerned with my welfare. Rest assured that should I be relegated to a refrigerator box, it will have housed at least a Sub-Zero in a previous life. In short it will be the finest refrigerator box available, with a deck and four car garage.

Fortunately, I now have a very nice apartment complete with a lovely view of the Washington Monument and Watergate. (Yes, I looked. Too cramped.) 1800 sq ft feels like a refrigerator box, but we'll make do for the time being.

Meanwhile, should those who think I'm being overly alarmist get their way, and sabotage the buyouts, consider the huge favor you'll be doing me when I go shopping for that place in Georgetown. They're getting cheaper all the while.

OK. OK. I get it. You're pissed. But at the end of the day, that don't feed the cat. Don't let being torqued, override your instinct for self preservation.

But I'm interested in how you will respond to my question.-- Reilly

And I'm glad to respond..... I actually haven't looked at Paulson's plan in detail, because I'm too busy packing, but I get the general idea via reportage. Going through the proposals you've listed they don't do anything to the original sin that prompted all this. That is to say, what are the derivatives in question really worth? That uncertainty and institutional mistrust is the foundation for lockup of the money river.

Given a fatter capital cushion, banks would have time to dispose of the bad loans in an orderly fashion.

This is just ridiculous. When a bank is leveraged 30-1, changing that ratio to 29-1 doesn't help. In fact the crunch is that people don't believe in the value of the 1 holding up the entire edifice. As for "orderly fashion" that went out the window months ago. Orderly fashion requires trust that sellers will fairly represent the nature of opaque instruments. That's not happening either. Trust has been squandered and will take years to rebuild.

First, the government should tell banks to cancel all dividend payments.

LOL. These guys are academics right? If the bank goes out of business, what difference does it make?

Second, the government should tell all healthy banks to issue new equity.

And who exactly is going to buy said "equity" when it's the first group taken out back and shot in a bankruptcy? Bondholders MIGHT get some of their money back, but for common stock holders it's sayonara senorita. I believe both Nancy Pelosi and John Kerry were reported to be in that exact position with AIG. After losing a few $100k each, do you think they would want to go back into the same situation?

Whereas it's horribly complicated to value bad loans, banks have share prices you can look up in seconds, so government could inject capital into banks quickly and at a fair level.

This circles back to the original problem with more capital. To reiterate, and as you rightly point out, it is the value of the bad loans that is gumming up the works. Getting the bad loans off the books,(ie building a bridge over the quicksand in the swamp) is the only way banks are going to trust each other, to pay back what they owe each other. (And this doesn't even cover the business model problem whereby banking goes back to stodgy old lending to value).

Those tactics are very often the true indications of the intent of the one using them (see Illegal Iraq Invasion). When fear is used as leverage to demand immediate acceptance, people rightly question the motivations involved.

Oh please. You've seen the WMDs lined up and fired, with banks, brokerages, and now the worlds largest insurer on the ropes. Hell, they still haven't gotten the auction rate securities market going again and that's been frozen for months now. (For those of you in Palm Beach, those were securities touted as "like cash". Had you put money in said securities, you can't get your money back until/if all this blows over.)

So I ask you. What else do you need to see before you think it's time to do something drastic?

Shooter, no one doubts that something had to be done, it did/does. The rush to a solution is what scares me.

Annie, you still aren't getting it. This isn't a rush to a solution, this is a rush to just keep the machinery going long enough to even THINK about a solution.

It doesn't matter who said what when. It doesn't matter how much money it takes. The only thing that matters is that the world believes that the full faith and credit of the most powerful nation in the world is on display and ready to do what ever is required to keep the money river going.

If fact I want you to remember the moment you finally realize that it's your life and livelihood on the line here. This isn't about some abstract situation, it's about the possibility that lot's of regular people in the US, that their last paycheck was indeed their last paycheck. Banks are failing, bonds are forfeiting, money market funds are freezing, and funds are frantic.

Everybody lives on the money river, and that river could easily go dry. I don't know how you make a living, but right now the person you get a check from, is dependent on getting a check from someone else, and that person is dependent on getting yet another check of his own. Any stoppage, diversion, or dissipation of that river of money, means your check goes bye-bye.

Are you getting the picture yet?