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This post by Howard Simons originally appeared in RealMoney's Columnist Conversation earlier Friday. Click here for a free trial to RealMoney.

We just had a revolution. No, that's not hyperbole. As Congress has abdicated its duties and the president has been more or less AWOL, the Secretary of the Treasury and the chairman of the

Federal Reserve

have been forced to fill the vacuum. We are passing


and spending hundreds of billions if not trillions of dollars with little planning, no debate and no real understanding of the consequences.

We got forced into this position of making short-term decisions under duress by lack of planning and by the lies and stupidity of parties too numerous to mention. I have no interest in playing the blame-game. But just as no one makes their best trading decisions under short-term duress, neither does anyone make their best policy decisions under duress.

And, for the record, I recognize the first step in First Aid is "stop the bleeding." If you don't, there's no need to go on to Step Two, clearing the airways. Had we not undertaken massive actions under duress this week, we might be facing, in no particular order:

1. Negative T-bill rates;

2. The imminent disappearance of

Morgan Stanley

and quite possibly

Goldman Sachs


3. The financial capital of the U.S. being in Charlotte, N.C., a nice city, if I might add; and

4. A complete collapse of all short-term credit markets

What will we pay for these short-term benefits? Once again, in no particular order:

1. A stock market whose price cannot be trusted as it has been pushed here by massive government intervention;

2. Home prices that will remain over market-clearing levels as they will be supported by the government. This will discourage new home buyers as price appreciation will be hard to come by;

3. Dysfunctional options and futures markets, and quite likely the bankruptcy of more than one clearing firm. Today's expirations might have required short sales of stocks into options and futures positions, and those clearing firms are liable to The Options Clearing Corporation;

4. Recognition that any future government bailout for a firm will involve wiping out of common shareholders. This will place the value of a stock lower as it raises the implied volatility of the at-the-money put option.

5. Large-scale future restrictions on financial firms. Maybe I'm speaking for myself here, but I for one am awfully tired of one crisis after another. As Wall Street has proven incompetent in managing its risks and has turned itself into a ward of the state, it will be restricted in what it can do and how much it will be allowed to make in compensation.

The implications of all of these nationalizations is going to take a while to absorb. We just had a revolution, an unplanned and accidental one at that. A week ago,




were self-standing firms, AIG was not a ward of the state and money market funds had no taxpayer-funded protections. A month ago, Fannie Mae and Freddie Mac were in operation, and their preferred shares were part of many banks' capital base. Six and one-half months ago, Bear Stearns was still independent.

It takes a while to recognize when your country has been conquered and those fellows in the uniforms speaking a different language are now in charge. It is a new world we are living in, one no one foresaw or intended.

Meet the new boss; not the same as the old boss.

Howard L. Simons is president of Simons Research, a strategist for Bianco Research, a trading consultant and the author of

The Dynamic Option Selection System

. Under no circumstances does the information in this column represent a recommendation to buy or sell securities. While Simons cannot provide investment advice or recommendations, he appreciates your feedback;

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