Is there anyone left who is not asking for a government handout? Do the feds have the first clue as to how successful their bailout efforts are likely to be? Treasury Secretary Hank Paulson sounds way too declarative for my taste; yes, he needs to offer assurance that he has the crisis under control, but he really doesn’t and everyone knows it. I’d almost he rather keep his mouth shut for a while. (He sounded especially defensive in an NPR interview - borderline cobative.) As NYT columnist Floyd Norris notes, "The government seems to have written checks with little knowledge of how deep the rot went." Here's more:

It doesn’t work to be a passive investor when you are handing out bailouts. On the other hand, the idea that government planners should determine where companies invest their money does not sound so great either. What is clear is that the Bush administration, in this as in so many other things, will do as it pleases. The bailout legislation contemplated the purchase of bad bank assets. That idea is now abandoned for most institutions. The legislation set up an elaborate oversight mechanism, and required periodic reports. None of that is happening. Instead, the first round of bailees are back for second helpings.

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All this reflects the conflicting needs and responsibilities of a government that deems companies to be too important to fail. It wants to keep them going, but also wants them to act in ways that seem good for society, whether that consists of cutting mortgage rates or building fuel-efficient cars. And it does not want to increase economic distress at a time when millions are losing their jobs. So the tough choices that would normally have to be made by a company in trouble can be postponed, thereby prolonging the pain.