Rescue the Rescue, the title of Paul Friedman's editorial today, does a nice job of laying out the issues. To him, this is the scariest time in his life for the simple reason that it is "own failure to regulate our own financial system and to legislate the proper remedy that is doing us in." As I do, I think we have a lot of people who are clueless about economics pushing the representatives who don't know any more about economics to make unsound decisions so they will be reelected in November. Friedman says:

I’ve always believed that America’s government was a unique political system — one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.

He goes on to note that even if you do not own equities and bonds directly, you do depend on the financial markets for everything from your pension to loan on your car to your town's airport and sewers.

I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don’t deserve it. Otherwise, you’re saying: I’m going to hold my breath until that Wall Street fat cat turns blue. But he’s not going to turn blue; you are, or we all are. We have to get this right.

It is time for our representatives to to what they are paid to do. What is that since most of them seem to think it is to get reelected so they can go to fancy restaurants with lobbyist? It is to do the right thing for our country even if it is the wrong them for them politically. Where did all the true patriots go?

Slow Rise for a New Era, an editorial in today's Washington Post by Harold Meyerson, goes on from where Friedman left off. He surmises that this is the death nell of what is in my view an insane recapitulation of the tragedy of the commons: "that the market can do no wrong and the government no right ... ."

He is less blunt about it than Friedman, but he too believes that the Republican's solutions to this problem "were so wide of the mark that they can be understood only as faith-based solutions to empirical problems. " Lowering capital gains taxes isn't going to fix it.

Just what was proposed in the bill defeated on Monday? Well, it did the following:

• Created a possible equity stake in some banks in return for the public saving them.
• Restricted Wall Street CEO pay.
• Allowed for a stock-transaction tax to cover any government losses after five years

Alas, we will end up no matter what happens with only three really big banks: Citigroup (1), Bank of America (2), and JP Morgan Chase (3). (This begs the question of ING, UBS, Royal Bank of Scotland (Citizens) and HBSC which have a large presence in the US and could be positioned to increase their market share given the crisis.). He believes that this will mean tighter controls over the remaining banks because of the potential for a monopoly.

The Senate will vote later today if all goes according to plan.