I agree with most everything...Solyndra...definitely..that was gov't interferring with the markets at its worse. GM, I definitely agree...much better to go through a 'controlled bankruptcy' and have new mgmt negotiate with the UAW on more amenable pension & health arrangements. They are already making good progress there.

As for even AIG getting a 'bailout', I don't quite agree with that. Yes, they did get a ton of money, on seemingly 'cheap terms', but the logic is the same. If the insurer of all these financial instruments can't honor it's contracts...imagine the implications for the economy as a whole. Not only would they be reneging on contracts, enshrined in law, but many firms that purchased all sorts of insurance (not just on CDOs) - GE, Walmart, etc - on various assets/products would instantly be SOL.

So even if you take just the financial firms and their tanglings there out of the picture, in terms of getting back 100 cents on the dollar on their CDS Swaps, if AIG can't honor ANY of their contracts at a time when companies (all throughout the country in hundreds of industries) are experiencing softer aggregate demand and falling revenue, just that alone would be catastrophic beyond anything we have ever seen.

So I don't see it as an 'AIG bailout', but rather saving the US economy. Besides, they will be able to recoup their investment once they finish selling the useful assets and repairing the balance sheet over the long term.

Also, it's not just Fannie and Freddie that are to blame - as Bernanke said the exhorbitant global imbalances with countries running massive current account surpluses that creates an incentive for investors to put money to work. China doesn't want it's $3T sitting in cash, even just $100B sitting in cash could cost China about $2B - $10B/year depending on where it is sitting (just in inflation alone). So the pressure to at least do something to protect it against inflation is immense and that's just China.

Suffice it to say, there are many factors (from the mortgage tax credit to Fannie & Freddie to global imbalances to misaligned incentives on Wall St.) that are to blame. The damn media likes to play on the most populist and it's annoying.

One of the things I can say, is that I am impressed that people like Bernanke and Paulson can hold their nose and go against EVERYTHING they believe in (i.e. non-intervention in markets) and everything they have been taught and learned over their entire professional careers and completely violate these beliefs in a matter of days/weeks. It's easy to sit on the sidelines and vilify these people for their actions, when you don't quite understand the implications of non-action and even how tough it was for them to make those decisions. The fact is, these people ignored their beliefs and acted in the country's interest.

I am not even American and I can admire their actions.

Edit 1: To put their actions into perspective, it's the equivalent of being a 'pro-lifer' your entire life and in order to save the entire country you have to personally sanction wide-scale abortions. How many people would be able to do that? Might be a little dramatic, but I believe the parallels are similar.