The anti-regulation, anti-tax, pro-greed agenda of conservatives and the Republican party produced this crisis. They got what they wanted: predatory lending and an orgy of debt. They got what they wanted: flat wages, jobs fleeing overseas, eroding benefits and soaring corporate profits. They got what they wanted: a society dominated by Wall Street and globalized corporations.

Lacking wage income, and in an environment of easy money, working people took on loans to support spending. Now the house of cards is collapsing.

What Paulson is doing is holding the financial markets hostage to protect his bankers interests. If Paulson really wanted to clean things up he would audit all the banks. Banks that didn't meet capital requirements would secure capital or sell out ... This would unfreeze the financial markets right away as all the dirty laundry would be accounted for.

But No! Paulson has engaged in this charade of a special SIV fund that is postponing , at the worlds expense, the resolution of solvency issues. This is cronyism to the highest degree, jeopardizing the world's economy, and tax payer dollars for the benefit of BAC, CITI and a few others.

Glass Steagall needs to be reimplemented separating deposit banks from all other financial entities. Why should taxpayers, government and indeed most of the central banks in the world act as a guarantor for the richest of the rich while they play fast and loose with insured deposits ?

The privately owned and operated Federal Reserve should be replaced with a Public Central Bank whose mandate would be inflation control and credit worthiness, not the profit of a small boys club of financiers who put at risk the economy of the United States and much of the world.

There need to be criminal investigations into every layer of the mortgage fraud and that should include Paulson himself, for his culpability both as President and CEO of Goldman Sachs and as the Secretary of the Treasury of The United States.

Most sweeping statements don't stand up too well to analysis.

"In the long run, "risk" is being sold off by people who know best how to evaluate it to people who don't know what they're in for."

Absolutely. However, Citi both created it and bought it. I don't know what it means when our largest bank blows itself up. It's not like hedge funds marketing alpha to a pension fund manager. These guys created it and kept it, thinking it was a 'good deal.' Yikes.

I don't disagree with the prior poster who wants to split FDIC insured banks from investment banks. However, it is too late to regulate CDO's. The financial markets couldn't get enough of them and now they don't want any at any price. Why bother to regulate behavior that no longer exists?

In general, I'm all for letting the markets work things out. However when housing and banking are at ground zero, the collateral damage could punish a lot of civilians. Housing and banking need to take their punishment and are getting it.

The lack of transparency of CDO's is really at the root of turning a problem into a catastrophe. The US economy is pretty robust and can take a big hit. Although it wasn't pretty, the 1995 hurricanes caused about $200 billion in damage and property insurers paid about $100 billion. None of them went broke and there was no talk of a global financial collapse. The global capital markets, as enormous as they are, seem to be imploding on losses in the same general range.

The markets are failing because of the byzantine complexity of of these ginned up securities. The markets believed everything and now they believe nothing. The only people that understand them are the ones trying to sell them, and even they don't seem to get it.

A couple of quotes:

"any trade/security that has more than even a few inputs to "model" the true value for buying/selling is NOT TRADING at this time. There is no margin for error on these trades, and everyone is running in one direction - SELL. The credit markets have long gone from trading on the traditional ways of valuation to now trading solely on emotion and the forced elimination/reduction of certain exposures."

" There's a new risk in the market and its called memo risk. (The risk that you'll have to write a memo to your boss on why you own it)."

The efficiency, depth, and liquidity of capital markets, as well as their appetite for risk (to the extent that they ever had one) has been trumped by lack of transparency.

Letting the markets seize up is fine if there wasn't the risk of so much collateral damage. This is a mess, and maybe time won't help. However, the rather modest attempts to let the excesses unwind in a more orderly manner seems reasonable. Slowing things down doesn't always increase the pain, and for this particular issue, it seems essential.

While I agree that it's okay for government to step in at some point at which dire conseqences must be averted, it's not clear at all to me that we've reached that point yet.

Here's how the situation appears to me thus far: basically a bunch of professional investors who should've known better have gotten burned (too bad for them), and greedy, foolish average citizens have had to give up homes they couldn't afford to begin with (ditto). That doesn't exactly sound like a crisis.

When the government bails out people who make bad decisions, it only encourages them to make more bad decisions. Where does it end? And why should people who have invested responsibly, whether in real estate or elsewhere, have to come to the rescue?

unregulated capitalism isn't pretty.as the saying went,the problem with communism is communism,the problem with capitalism is capitalists.

but even if bailing someone out makes sense(seems to me responsibility for mistakes is a key to capitalism),one problem that has really peaked during this right wing reign,is that no-one is ever responsible,no-one stands up to say i screwed up,so here we are,drowning in crap but it's no-ones fault(sounds like Iraq).

like in this one,Greenie and all those crazy right wing clowns who spend without paying for it,and set the rules so thier rich friends get richer,can hold up thier hands and say"opps,sorry,we did this".there,now you can have your bailout......