NYT editorial: How we will emerge from this crisis is not yet known. But we know how we got into it.

[DeepModem Mom]

Building a Better Bailout
Published: October 9, 2008

Last month, when he defended his bailout plan before Congress, Treasury Secretary Henry Paulson was reluctant to have the government take an ownership stake in the banks that taxpayers are going to rescue. It came as a relief on Wednesday when he executed an about-face and said that the Treasury was now considering doing just that....

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Under the original plan, the government’s role was to pave the way for private investors to regain control of the financial system as soon as possible.

In essence, that plan adhered to the prevailing Republican ideology that the government’s primary aim should be to help the markets to pursue profits, and that markets, in turn, best provide for the public interest. Clearly, if that were the case, we would not be in this mess. Taking ownership in return for taxpayer money is an admission that government is the only force that can pull us out of this crisis — by asserting the public interest.

Even with a better bailout, it will take years, not months, to repair the damage. It is now obvious that Wall Street spent most of the Bush years trafficking in bad debt, a profitable enterprise while it lasted, but a destructive force that is now wreaking new havoc daily.

At last count, 12 million homeowners had zero or negative equity in their homes. Millions are in some stage of foreclosure. Retirement and other savings, for those Americans who have them, are being decimated, and unemployment is rising. Consumers are recoiling, an understandable reaction, but one that will reinforce the downward economic trend. There surely are more economic shocks in store, among them, corporate defaults and state-government budget emergencies.

How we will emerge from this crisis is not yet known. But we know how we got into it. The question — which is about to be put to the voters in November — is whether the nation will learn from its mistakes, or whether the deregulatory, anti-government ethos of the last several decades will be alllowed to reassert itself when the economy begins to recover.

http://www.nytimes.com/2008/10/10/opinion/10fri1.html?hp