Government Made the Mess

That is 200 times the size of this $700 billion rescue plan. If either the credit default swaps market, which involves companies placing bets on and insuring risk against the likelihood of default on different types of bonds, or the derivatives market is really broken and going to collapse, this relatively small amount of money will not stop that process from happening.

The most recent and most disturbing proposal that is being promoted by lenders and politicians is an attempt to abolish fair value accounting. What this means is that lenders do not need to mark their assets to what those assets could be sold for in the market. Both regulators and auditors oppose this plan to eliminate, or water down, fair value accounting.

Nevertheless, the banks and their political friends are asking investors and taxpayers to "just trust them" about the value of these assets on bank balance sheets. If it already weren't obvious, this is the most blatant attempt yet by the "fat cats" on Wall Street and in Washington to sucker investors and the taxpayer. It's also strikingly similar to what the Japanese banks pulled off after their bubble burst with government support, and we know how well that worked. It took Japan more than a decade to work through its banking crisis.

It failed miserably and probably made their problems a lot worse. Is that the outcome we want here? My view is that the further away we move form honest and transparent markets, the worse this crisis of confidence is going to get.