For what it's worth, my day job and my main part-time job are both entirely dependent on the market, so I sure hope the market doesn't need to crash. I agree with David Einhorn (who, by the way, has been short Lehman for a while): the stock market is okay, but the credit market is way overpriced.

To make the pro-bailout argument more clear, here is one reputable economist predicting that if we had let the FMs default, the dollar would drop about 30% and unemployment would double, in about a week.

http://www.marginalrevolution.com/marginalrevolution/2008/09...

Obviously, these bail outs have their costs, such as the value of money lent as well as increased moral hazard, but it's worth considering whether this is worth the potential cost of a market collapse to the whole economy.

it won't. this loan doesn't unwind the terrible decisions aig (and others) made, nor the hedges they tied to those decisions, and the hedges they tied to those hedges, and the hedges they tied to those hedges.

the derivatives unwind cannot be stopped short of a repudiation of all global currencies. the amount of leveraged capital in hedge deals is still north of $100 trillion. no one has the money to pay that out. it would be easier just to erase the USD dollar than to circulate $100 trillion in new fiat wealth...the effect would be the same anyway...worthless dollar