Mike Shedlock had a good question today, "What has Paulson wrought?" With the bailouts of Bear Stearns and F&F already on the books of US taxpayers, IndyMac already taken over by the FDIC, resources have been stretched thin to withstand another major move. I have some similar questions:
How does the Federal Reserve justify bailing out one institution and not another (like Lehman, for example)? When does word of the backroom deals start getting leaked? Enough so that society in general intensifies their hatred toward the banking/corporate elites similar to how they did after the Enron and WorldCom scandals. How about after the elections for the least noticeable effect? Or the week of the election for the most effect? Take your pick.
Mike also raised a good point that one of the last resorts of the Federal Reserve will be to start printing. I agree that they will try something like this. But it's overall effectiveness will be minute compared to credit destruction.
Yesterday, Paul Kasriel answered the question, "Who holds debt sponsored by GSEs?" Today he had some good commentson Japan and how rapidly it appears to be slowing along with some other tidbits.