As if we needed proof that the government bailout is the wrong tactic...

Hugo Chavez thinks that the nationalization of the mortgage giants is a sign that America has realized the superiority of socialism over capitalism.  

I don't think the average American thinks so.  I think the government is beginning to slip, though, and show its true colors of wanting more and more control over the economy, and through the economy, the day-to-day lives of its people.  

Today, the government has approved a measure lending (at government interest rates) $25 billion to the auto industry.  I understand the reasoning behind the loans--though auto makers' interests would be better served by moving plants out of the areas they're in to try to get out from under the onerous pay and benefits packages the unions force them to pay, it would definitely not be in the nation's best interests to lose the jobs these plants represent.  Ergo, we have this huge taxpayer funded loan to make up for the money that the average investor is too wise to pour into the manufacturers.  They do, after all, need to modernize.  

I believe that the big three automakers are also shifting away from building the gas guzzler trucks and SUVs toward building more small, efficient, cars, as well.  So, while I think they're unwise to accept union "deals," they're at least (finally) showing wisdom in their product production choices.

We've also learned today that the FDIC is going to need a good-sized bailout.  Unlike Hong Kong, or even our own banks during the Great Depression, our banks' deposits are insured by a governmental agency--each account, up to $100,000 will be repaid, even if the bank goes under.  

Unfortunately, they're not set up to deal with how many banks are going under, or how much money is deposited in each bank.  

Without government interference introducing the concept of fairness in housing in the '60s, the platform wouldn't have been there for the easy extension in the '90s that set up the mortgage problem.  Without that easy back door into forcing banks to make loans to those who were very much unqualified financially, the government likely wouldn't have been able to interfere quite so heavily.  Without the current subprime lending collapses, banks likely wouldn't be collapsing at the rate and frequency that they currently are, and the FDIC wouldn't need more government interference to keep working to prevent a run on banks.

I believe that, while things might get a little worse before they get better without the government bailout that's being contemplated right now, if the government does push through the $700 billion bailout, things will be much worse for much longer.  After all, it was FDR's policies between the time he was elected to his first term and December 1941 that caused the Great Depression to stretch on as long as it did.