That's exactly what the Federal Government did during the Great Depression - bail out the entire housing market. Personally, I view what the government did today as akin to the FDIC. In the GD, many perfectly sound banks were brought to their knees and beyond by panicky depositors withdrawing their money. As far as I can see, Freddy and Fanny are both perfectly sound (and not, for example, investors in sub-prime mortgages) but then, as now, panic was everywhere. The FDIC assured depositors that they wouldn't lose their life savings if the bank went belly up which resulted in runs on banks stopping and the banking industry returning to an even keel. This is the equivalent. And, at least at the outset, has yielded similar results (Freddie's auctions today appear to be going very nicely).

As far as I'm concerned, your wacko ideas about regulation are a pernicious evil that need to be extirpated but that doesn't mean that I think that the government doesn't have a role to play in all this. The government has a responsibility to create and maintain a level playing field for all the various players which is best done with general rules (laws) and not detailed rules (regulations). One of the things I don't understand in all this mess is that much of the sub-prime mess can be laid at the feet of firms which practiced fraud and deceit on their borrowers. Somehow, I thought fraud and deceit were illegal. So where are the prosecutions?

While prosecutions are both satisfying and necessary in this case, they won't address the problem. A problem that you mentioned at the beginning of your post and then promptly ignored: "These firms are too big to be allowed to fail" is the root. At the turn of the last century the government was breaking up the trusts - firms that were so large and powerful that they wielded monopoly power (definitely not good for the level playing field). We have an analogous situation today. Firms being "too big to fail" are not the stuff that level playing fields are made of. If firms become too big to fail, then either they need to be taken over by the government or broken up so that they can't pose that danger to society. I'm not holding my breath since the government wouldn't even break up Micro$oft after that evil empire was declared a monopolist. But that's the real solution. No commercial entity should be allowed to get so large and powerful that they can bring down either the American economy and/or the world economy even if they aren't or aren't acting like monopolists.

OBTW, commercial entities don't have a corner on the market of stupid. They have a partner who is even bigger and better at stupid than they are - the government.

There are many ways to approach this tempest in a teapot but the one I like best is PC. What we see here is the logical extension of Political Correctness (which we can thank the left for). Add a dash of today's Salon article on the lowering of the outrage bar and you have it. And it's stupid.

Being unable to use the glories of the English language to say what you mean because somebody might be OFFENDED means that when somebody steps out of the narrow confines of PC-Land, you don't know how to take it. Complete is the bowdlerization of our language.

And now that bowdlerization is being extended to imagery.

There will be long term consequences from this loss of stature. Habits and perceptions are hard to change. World perceptions didn't change much even after we started to be the world's bully which started before the currently regime. But now the perception has changed and it will take something equally dramatic to change it again. Unfortunately, evil is much more dramatic than good. Our stature isn't going to magically return with a new regime. Our moral authority is gone and only a sustained sea change in how we relate to the rest of the world can bring some of it back.

I don't see that happening, even with an Obama regime. Our military authority will also wane simply because we can't afford it. When the butcher's bill for these little foreign adventures finally gets presented, how will we pay it?

The military or the people?

The issues today are very different from the ones that the US faced during the cold war. One of the primary differences is that during the cold war we faced hostile governments. Today we face hostile populations. The strategy of muscular intimidation works (sometimes) with governments but not with people.

We will never win a "Global War On Terror". The very statement is so fraught with contradictions as to be laughable. But we can do something about the circumstances that cause people (as opposed to governments) to attack us. There are those idiots who will jump up and down and scream that you don't negotiate with terrorists. They will continue to be attacked by terrorists. At some point somebody has to realize that security doesn't come out of a gun barrel.