Actually you're wrong. Commercial lending and inter bank lending is now the problem. Even though the govt. has assured all the banks that it will resolve the mortgage backed problem the banks are not lending unless the business is very strong and they are not lending to each other because they are building their capital reserves.
It really isn't hard to see that this would happen regardless of how much money the govt. would throw at the problem. Banks are getting out of the secondary mortgage market and soon they will be pulling back on credit cards and student loans. As the bubble deflates individuals and businesses with great credit will not have a problem getting loans, but those that have anything questionable in their credit won't.
I have said repeatedly that you can’t stimulate confidence.
That said, to say the bailout has been a failure when it hasn’t even been implemented yet is ridiculous.
Nothing you said did anything but elaborate, not refute, the point I was making. For whatever reasons, including those you spelled out, the credit crisis is not going to be unraveled overnight, and thinking it will is ignorant.