Good summarization, but you left a few things out and added something that doesn't belong here.

We can't support a "solution" unless we have the much-vaunted (and, to tell the truth, much needed) transparency. IOW, it would help if you would provide a list specifying Roubini's 10 step solution.

I am a Republican and I am not nuts. Why don't we try solving our national economic problems as nonpartisans? The Republicans should not get kudos, liberals should not get kudos, independents should not get kudos and the Democrats should not get kudos for working together to fix what's broken.

With Roubini's 10 steps, I would prefer if you'd just summarize his steps and, in addition to that, provide a link where you found it.

I look forward to hearing from you soon, bones20. Thank you!

Regards,
Susan

"My biggest complaint with the Paulson plan is that it's a liquidity response to a solvency problem. "  

Yes, we definitely have a solvency problem. Total Debt (governmental, personal, corporate) in this country stands at 330% of GNP and it is growing exponentially.  The previous high was 190% in 1932.  Our debts (even excluding Medicare unfunded commitments) is beyond anything we will ever repay.  The deleveraging process is painful and it will be ugly. 

To deal with an excessive debt situation (where the excessive debt will never be repaid) we have two choices:

1)  Go through debt repudiation/deleveraging process much like we did in the 30s.

2)  Inflate our way out of the excessive debt by printing cheap and copious quantities of money, aka monetizing the debt. (Warning: governments don't survive this type of approach.)

As he promised Bernanke attempted to get the helicopters off the ground so he could throw cash out the window to prevent deflation.  Congress has slowed him down a little, but he and the FED can get much more creative in their attempt to spread cash over the country.  My hope is in his attempt to prevent deflation that he doesn't set off a inflationary binge that will cause much more damage in the end.  But as the approach has been for the last few years, if debts don't matter, then maybe Bernanke can prevent deflation and not cause inflation.....  I hope he is right, but I doubt it. 

Roubini has been right all along about the economy he is worth reading.   Buffett was talking about the trade balance, derivatives (as in WEAPONS OF MASS FINANCIAL DESTRUCTION), ownership capitalism and a laundry list of of other pertenent problems for a long time.  It is a shame that those that know what is going on don't have the power to act, and those that act don't have a clue. 

Looks like it is a non-point, the bail out went down in a wonderful display of

partisanship.  I looked at the $700 billion plan as a hale Mary pass anyway, with very little chance of changing anything.  

I'd say the subject bill failed in a Bi-Partisan manner.  A majority of republicans voted NO,  but an awful lot of democrats also voted NO.

The actual numbers:  Democrats:  141 for, 94 opposed;  Republicans:  66 for, 138 opposed.

Now, setting politics aside, as a conservative and taxpayer, I applaud those legislators who were not so quick to give away over $700 BILLION dollars!    My 401K may suffer now, and I may or may not see it recover, but from a significant amount of history, I have zero chance of seeing and "return" from money taken in taxes!

Next - Don't know about you, but I remain really skeptical of a plan that will be essentially administrered and "watch-dogged" by the same people who's actions and inactions helped create the current situation, and by this I mean many leaders in BOTH parties (plus those now advising Obama).

//mjs 

I for one am glad that the proposed bail-out failed.  Brain-dead on arrival.  I liked Buffett's idea of buying distressed debt at current market prices - but this only addresses the liquidity problem - and could easily be distorted into a covert handout.  As above, I think the best solution to the solvency problem is bank recapitalization - preferably by mandate as above rather than dinking around with individual negotiations.  Not sure I would go as far as Roubini and mandate an across-the-board reduction in mortgage balances due, though.

Otherwise, I am and continue to be shell-shocked by the markets.  Emerging markets and commodities have gotten creamed!  The USD has rallied!  Definitely silly season in the market.  Wish I had moved everything into cash around January.  I've gotten crushed since July.  Not planning to change anything though.

Can't wait for this month's P/E ratios for global markets to be reported over at the S&P site.  The P/E ratio for Russia must be around 4 by now.

No fun to be an investor in these markets; worse to be a money manager for others. Anyone who's leveraged in this market must be giggling and drooling on themselves by now!

I looked at the Paulson plan as a visiting team's hale mary pass with 1 second on the clock. The home crowd is going wild and the chances of it working is about 1%.  An awful lot of people would make a lot of money (again) and the chance that it actually helped the economy was about slim to none.  The debt would then be passed off onto the kids and their kids....  As far as Paulson plan  making money, that ranks right up their with the Iraqi oil will pay for the war, I'll respect you in the morning etc.

 One thing is for sure if the derivative market and/or leverage isn't brought under control then the same thing (or a variation) will happen again. This is especially true when there is easy money floating around from the FED.  Another asset bubble would start almost immediately. 

Curing an excessive debt problem with more debt isn't too bright.  The bill seemed to me to solve a problem created mainly by investment banks of excessive leverage by taking the bogus debt off the Investment banks books and putting the bad debts on the government books.  Not too bright to me, but I'm just an old farmer, what do I know. 

The FED has made tons of money (some $600 billion today alone) available, their is just no trust in the assets held by the banks, the ability of citizens to make their morgage, car, CC  payments etc. The country (and maybe the world) is going through deleveraging, and no amount of liquidity will stop it.Until trust is restored (and I don't think buying up bogus assets from banks will do it) nothing good is going to happen in the economy. 

Hey - it looks like Paulson was listening!!

Now it seems like just about every economist must have been whispering that the original Paulson plan was bone-headed and they needed to invest equity in the banks, not buy toxic waste.  

Plus I imagine that before Paulson got back to his office after the bill was passed he must have had hundreds of messages from people wanting to sell him crapola.  Heck, $700 billion probably wouldn't even allow Paulson to clean up the books of just the Fed, AIG, Fannie and Freddie, let alone clear up the commercial paper market, muni bond market, appease the Chinese, etc, etc.

Anyway, it seems like maybe we are witnessing a small, very partial victory for intelligence over stupidity.  Let's hope this is the start of a trend!