But other things are different as well. primarily, globalism - the free flow of capital around the world. And a concentrated banking system.

One of the vexing aspects (to me anyway) in explaining the current crisis is the proportionately small number of bad sub-prime loans that have been able to do this to the financial system.

After all, mark all the sub-primes to zero and who cares? In the scheme of things its a small number. Not enough of a capital loss to bring the world to its financial knees. The problem appears to be a crisis in confidence among the banking players. Who's balance sheet is OK, who's is not? That is what froze interbank lending. That lead to concerns about corporate health, and hence froze the commercial paper market. Then you have a flight to government securities and so on. A pure liquidity crunch, nothing more. (or less) As you point out. The balance of the economy is/was relatively sound fundamentally. Are the Q2 and Q3 GDP numbers that distant a memory?!?

Its all about liquidity and keeping capital flowing until order returns. Hence the Citi bailout debacle. Bad economics; bad justice. RealKapitalism.

The two situtations are not comparable. We have no gold standard tying the Feds hands. We have deposit insurance. We have a very large economy that is more robust (i.e. other sectors of the economy are very large and unlikely to collapse becauase Citi goes belly up--e.g. health care). And a fucked up company like Citi needs to die. When you run a company into the ground keeping it going is just stupid. That is what we are doing, we are stuck on stupid.

I don't know what the value of the New York Bank of the United States was but I do know that the value of the largest bank in the country in 1927 was $75 million. Assuming that the NYBUS was smaller and that there was a long tail, I doubt that my suggestion of thousands is that far off.

Alex is correct. This bailout is a sham and - philosophically - should not be done. Citi got itself into this mess, its stakeholders should bare the brunt - not taxpayers. That is the American way.......well, at least it used to be.

However, Dave is spot on. The concentration of the banking industry is the driver. The view from Washington is that the liquidity problems of a bank run outweigh the cost and injustice of the bailout. Sad but probably true.

On that note - I chuckle (a sad chuckle) at those who rant that "failed Bush policies" caused this mess. Or that Obama should be inaugurated tomorrow to deal with it. Ask people to enumerate those "failed policies" and you generally get a blank stare, as does the query "exactly what will Obama do to fix it?"

The hallmark economic policies during the Bush administration are the income tax rate reductions and loss of spending discipline. Neither caused the current problem.

Some would scream "lax regulation!" But the repeal of Glass-Steagel, which enabled traditional business lenders to pursue risky interests as investment banking wannabees, preceded Bush, having been passed during the Presidency of a certain WJ Clinton. And does anyone need to be reminded that Bush's proposed overhauls of mortgage mavens Freddie and Fannie went down in a torrent of ("you hate the poor") criticism by the likes of Barney Frank, Maxine Walters and Chris Dodd?

Dave S is right. Banking concentration is the issue; the "toxic waste" assets are sprinkled in and around an interconnected and concentrated global banking industry. And those banks haven't wanted to lend to each other for fear of what might be on the other guys balance sheet. ("You insolvent, you." Retort: "Takes one to know one.") So if you want to criticize Bush, criticize him for not breaking up "Big Banking."

Was that doable?? I doubt it. The left was too busy whining and spinning conspiracy theories about really important things - like "Big Oil" - while taking finance lobbyists coin, for any consideration like that. Let's see, the price of bank stocks today is......and the price of gas today is.........?

Hardly arbitrary.

Detroit does not deserve a bailout, but we can either pay to try and keep them alive, or we can pay for the funeral. Either way the taxpayers are going to foot the bill.

We cannot afford to have GM go bankrupt right now. I question Pelosi's thought process...

Odd.