As someone who opposed the ill-starred bailout from start to finish, allow me to observe a few things.

First, the $700 billion of asset buying intervention from the Federal government means next to nothing in a world with capital flows in excess of trillions of dollars a day.  Why else would the U.S. markets be down another 6-8 percent as of this writing, with Asian markets down about 5 percent and European markets down 6-9 percent on the day? About $25 trillion of equity has been lost in stock markets around the world this year, with another $2 trillion in value evaporating today alone.  These values have swamped the action Congress took last week, as many economists knew they would.

Second, the bailout did nothing to address the fundamentals: mainly, that our capital gains tax rate is too high, that America’s corporate taxes are the second highest in the industrialized world, and that the mark-to-market accounting rule for certain assets needed to be changed earlier (the SEC just got the authority to suspend the rule last Friday).  Add to that the fact that this who financial crisis got legs because Fannie Mae and Freddie Mac were underwriting loans to unqualified buyers with the implicit guarantee of our tax money to back them up, causing a speculative housing bubble to get far larger than it would have under free market conditions.

Sadly, the ability of Republicans to explain this issue to the public has been compromised by the large numbers of our elected officials, from President Bush on down, who supported the bailout rather than focusing on fixing the root cause of our current travails.  Absent any clear alternative plan, we may be headed down the path of destructive government meddling in the market that economists today believe deepened and prolonged the economic difficulties that began in 1929 and lasted through the advent of WWII.