Stocks tumble after Bear Stearns bailout
NEW YORK – Stocks tumbled Friday as a plan to alleviate a liquidity crisis at Bear Stearns Cos. touched off concerns about the severity of credit troubles. Each of the major indexes lost more than 2 percent; the Dow Jones industrial average gave up about 300 points.

Run on Big Wall St. Bank Spurs Rescue Backed by U.S.
Just three days ago, the head of Bear Stearns, the beleaguered investment bank, sought to assure Wall Street that his firm was safe. But those assurances were blown away in what amounted to a bank run at Bear Stearns, prompting JPMorgan Chase and the Federal Reserve Bank of New York to step in on Friday with a financial rescue package intended to keep the firm afloat.

The Fed’s Historic Innovation
With a $200 billion plan to ease the credit crunch, a 21st century economy is getting the 21st century monetary policy it requires
Hey, bailing out the thieves is just fine with Business Week.

Avoid overcorrecting economy, Bush warns
WASHINGTON – President Bush on Saturday said the government must guard against going too far in trying to fix the troubled economy, cautioning that “one of the worst things you can do is overcorrect.” Democrats said Bush was relying on inaction to solve the problem.
Were you on the edge of your seat, wondering what Bush thinks about the economy?

Ben Bernanke Blues (a very funny video—a bit long, but funny all the way through)

Where are all of the “free market” people now? (by Chris in Paris at AMERICAblog)
Now that the Fed has chopped interest rates (and will chop again, not that it’s going to translate into lower rates for consumers) and they pumped $200 billion into Wall Street, I’d like to know where exactly the so-called free market/industry self-regulate people are. Where are they? They’re all at the front of the bloody line calling for more handouts. When Democrats ask for money for SCHIP or food money for the poor or unemployment extensions, all we hear is about cost. What is the matter with Democrats? Is it so hard to scream and yell like the GOP? Why are they so silent on this bailout? Even the homeowner bailout is a pittance compared to the Wall Street bailout.

A Subprime Conversation (Economist’s View)
I think the Fed will need to assume more risk than they have to date to unfreeze markets, and even that might not be enough. Remember, there are unrecoverable losses that must be suffered. When we talk about relief we mean that we hope things aren’t worse than they need to be, that a small fire doesn’t jump borders and become a large devastating fire, but so far the fire has continued to spread so it’s too early to say we have this thing fully contained – and most signs point the other way. For example, we saw the troubles with Bear Sterns, though I found it encouraging that the Fed showed it was willing to take aggressive action if and when it is needed.

Excerpts from the comments on the above post:

bullbust says…

“… inflation is not the main worry when financial markets appear on the verge of a downward spiral that could drag the economy down along with them.”… Angelo Mozillo [of Countrywide] keeps his 100s of millions. That is $100,000,000. If the price of gas, milk, or bread doubles … should he care? Jimmy Cayne? If Bear Stearns stock loses 80%, he still gets to keep 200 million of his Billion. If the price of gas, milk, or bread doubles who should he care? Tell me why, if I’m paying double for my bread, milk and gas, because of inflation, why should I let these crooks have any wealth? I will bail the system out, but first I want to see these crooks and shareholders lose everything…

Bruce Wilder says…

…predation, theft and fraud played a large part in what has gone on. blaming a crime wave on the shortcomings of the police does not solve the problem of crime that pays.

Sarah says…

…I’d also like to see some acknowledgment that firing most of the police force– and hiring a bunch of the police commissioner’s drinking buddies to supervise the remainder of the beat cops– was not exactly the brilliant innovation in market efficiency it was presented as being.

Outsourcing the Patients
More U.S. health insurers are slashing costs by sending policyholders overseas for pricey procedures