My biggest concern when the bailouts and Stimulus began was that the whole CDS-CDO-MBS charade was being replayed, only with the Lender of Last Resort as the bag-holder instead of investment houses like AIG-FP, Lehman and Bear Sterns. Bear and Lehman bought the farm, along with hundreds of billions in assets. The problem now with Fannie & Freddie having direct access to the Treasury is that the mortgage problem is not being solved, it’s being transferred to the government, which is not in any better position to solve it.

I wish the government actually had to take the time and trouble to print the money it is creating, and will create, to prop up the mortgages here and the other bad decisions that people made over the past decade with what was essentially free money. Printing a trillion dollars at a time in hundreds has to take some time, after all. Just being required to physically create the money generates a storage, transfer and resource headache that might dissuade someone from actually doing it. As it is, trillions can appear with a few keystrokes and the flick of a pen.

In medicine, there are some abscesses you can treat with antibiotics, some you can drain with a catheter, and some where you have to take the patient to the OR, make a big hole, cut out the dead tissue and flush everything clean. I think our financial issues rise to the level of the make-a-hole abscess. Unfortunately, it seems like the physicians in the White House and Congress are telling the patient to eat more milkshakes and candy and hoping a miracle happens. This is the wrong road, and has been for a while.