This government has said to the ultra wealthy:

"Don't worry. We'll nationalize your losses and bad business bets."

Essentially, they're using the (remaining) strength of the dollar to leverage bail-outs for investment banks. Just because the fed steps in does not mean that the economic damage is magically erased. Someone has to fit the bill. What the Fed is doing is transferring the damage to our currency and also the US taxpayer.

If the US gov't had spent an immediate 350billion to buy-out, take over and then write-down bad subprime loans using simple w2/tax file means testing, then the banks would have been bailed out just the same, but along the way, the US home-owner would have also been bailed out.

Instead, what we have done is we have gone to the ultra-rich, and have told them that they can make as many bad bets as they want. If they make a profit- Kudos. If they don't, then the US government will ride in and save their bacon.

I believe the fundamental problem pre-dates the accounting crisis and was arguably just as much the cause of that crisis as this crisis. Investors and Boards of Directors have fallen under the spell of 'Super-CEO syndrome'. The Idea that a business is all about the 'magical' talent of a few Chief Officers, rather than the strength of a good organization stocked with talent from the mailroom to the corner office, and rewarding continuous decades of demonstrated performance with steady increases in responsibility.

The boards heap out god-like sums of money to officers who are then largely left to run the company, unchecked, like a personal fiefdom. They take absurd risks, run up the balance sheets and profit lines with 'pixiedust' investments or re-structuring, and then take off with a golden parachute or infest the next business. Meanwhile, eventually, the house of cards comes down. Little loyalty is shown to the rank-and-file, whose effort produce the very surpluses with which the CEOs gamble. Good people are dismissed on a whim and escorted out the door by armed security guards with no notice and little or no severance.

If we are going to be capitalists, we have to be capitalists. We must let those who take bad bets go down. We must reward hard work. We must not socialize loss only for the ultra-rich and privatize profit only for the ultra-rich.

While I certainly do think our banking system needed rescuing, the problem is that we have simply rescued. We have not insisted that institutions clean house, fire the Officers responsible for this mess, clean out and ACCURATELY re-value their balance sheets- etc. No, we have essentially handed the very compulsive gamblers responsible for this crises another 300 billion dollars to throw after the SEVERAL TRILLION dollars of wealth they squandered. Meanwhile, the homeowners and the taxpayers and the economy as a whole absorbs the damage.

So here is what I fear with this 'missed' reform package- that this will be the formalization of the idea that this administration holds- Namely that the government bails out the super rich and screws the US taxpayer with the bill. If the Government was serious about solving the problem on wallstreet, these discount loans to investment banks would be predicated on 'Business in Good Standing' agreements, where the businesses would have to agree to hire independent auditors and identify and remove the Officers who made the bad decisions.

But thats not going to happen.

I have not read the 'reforms' much to this point. IT does strike me that most of them are reforms for problems we don't have, and very few actually impact the main cause of this crisis. But I'll have to dig up more information on them before I could say one way or the other. Lets just say that after seeing what these people call a 'bailout', I am less than enthused to see what they call 'regulation'.

Yeti