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I read that article, and yeah, it's interesting but it doesn't seem to realize what the problem is!

The author mentions a couple proposal that read as if the entire problem is due to bank mismanagement and low liquidity that can somehow be fixed by the fed injection.

That's already been done! The problem is that the poisoned assets, or securitized mortgage debt obligations are clogged in the system and no amount of injection of capital will bring value to this paper so that it can move and therefore allow the billions and trillions of related assets to move.

700B is simply a estimate of the value of the UNDERLYING assets, and not representative of the total or anywhere near it.

It's a well placed shot at the root of the problem and it takes these base assets out of the system thereby freeing capital for the banks and most importantof all, allowing the related trillion dollar derivative mess to begin to clear at a loss and a big one!

Nobody wins in this but the American economy as whole, and many banks will still fail as a result of the losses, as will investment firms of all sizes. And....the investors.

The problem is that the poisoned assets, or securitized mortgage debt obligations are clogged in the system and no amount of injection of capital will bring value to this paper so that it can move and therefore allow the billions and trillions of related assets to move.

I certainly don't dispute this. And time is of the essence in the attempt to address the crisis. But one can surely have serious misgivings with a plan that, in order to address the underlying cancer of certain derivatives, must supply value to mortgages that essentially have come a cropper.

The currently proposed approach, or bailout, that is being undertaken by the government may be all that we have. I have heard from a constant succession of sources, from Sec. Paulson on down to my next door neighbor, that it is the least dangerous path. However, a potential fix that has taxpayers underwriting failed mortgages and makes the promise of better regulation in the long run, does not warm the cockles of my heart. It's a fine line, to be sure; but there needs to be a generous helping of financial pain, not just regulation, served up to those who have engaged in the "Casino Capitalism" of derivatives.

And, other than an imminent economic collapse, my greatest fear is the potential for an even greater disaster down the road as a result of conditioning freebooters to believe that the government will step in to remove the risk of failure. It is a knowledge of the real possibility of failure as a result of risky behavior that does more to hold financial termites in check than any government regulator. This is a moral and financial dilemma of historic proportions.

I appreciate your insights, today.