http://news.yahoo.com/s/ap/20081128/ap_on_bi_ge/meltdown_coming_soon

Meltdown far from over, new mortgage crisis looms

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"It's a toxic drug and nobody knows how bad it's going to be," said Paul Miller, an analyst with Friedman, Billings, Ramsey, who was among the first to sound alarm bells in the residential market.''

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Those retailers typically were paying rent that was expected to cover mortgage payments. When those $20 billion in mortgages come due next year -- 2010 and 2011 totals are projected to be even higher -- many property owners won't have the money.

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"The system has never been tested for a deep recession," said Ken Rosen, a real estate hedge fund manager and University of California at Berkeley professor of real estate economics.

One hope was that the U.S. would use some of the $700 billion financial bailout to buy shaky investments from banks and insurance companies. That was the original plan. But Treasury Secretary Henry Paulson has issued a stunning turnabout, saying the U.S. no longer planned to buy troubled securities. For those watching the wave of commercial defaults about to crest, the announcement was poorly received.

"He's created havoc in the marketplace by changing the rules," Rosen said. "It was the stupidest statement on Earth."

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So if I'm correctly understanding this thing about the bailout, its proximate origin, and Obama's solution, it goes something like this:

Clinton hires Rudin, who is apparently in possession of either a magic wand that rivals the clenis, or a sound grounding in basic economic theory. For the nonce, I'll assume the latter. So Rudin implements a (sufficiently or relatively) sane economic policy, and voila! something once described to me as "the largest postwar economic expansion, ever"...now I have no idea if the quote is accurate, but I do have to say that the Clinton era policies helped me. So far, so good.

But if I understand the totality of Rudin's behavior (for instance, this:  http://www.talkingpointsmemo.com/archives/245520.php) his work is also the proximate cause of the current crisis, since it allowed these institutions (like Citi) to engage in behavior that has led them straight to the bottom....behavior they were disallowed prior to Rudin's advocacy for loosening protective legislation; which, in retrospect, seems to have been a bad idea. Sort of like handing out sympathomimetics as Halloween treats. Sure, we have lots of pretty pills; and we  keep them locked up for a reason.

Now here we are, fifteen years later (more or less) and Obama's solution is to hire Rudin; a guy out of a group of people addicted to financial instruments of dubious quality and suspect origin. Sort of like drugstore cowboys, only not sartorially handicapped. (And what is up with Milken? Still seeking a pardon? He's still guilty. Get a life, give it up, move on.)

With Rudin, I'm trying to see something other than a seventy year old guy wearing creased blue jeans and a pink polo shirt in a Karaoke bar after casual Friday; justifying his life by trying to talk his way through "Rehab".

Of course, the punchline is " They tried to make me go to rehab but I said no, no, no...." Or maybe "the invisible hand tried to make me go to rehab but I said no no no...."

Is anyone out there up for a New Economy?