You'd think it was FDR's first 100 days, given last week's flurry of activity from the federal government regarding America's economic meltdown.

You'd think it was FDR's first 100 days, given last week's flurry of activity from the federal government regarding America's economic meltdown.


On Friday Uncle Sam rolled up his sleeves and became considerably more aggressive, first guaranteeing that Washington - make that federal taxpayers - would be there to cover up to $50 billion in losses in money market funds, now vulnerable after once being among the safest places to park your savings.


Then the Securities and Exchange Commission (SEC) moved to head off manipulation of the market by investors trying to make big bucks betting on stocks to drop - "like looters after a hurricane," in the words of New York's attorney general - by temporarily banning so-called "short selling" of nearly 800 financial stocks.


Meanwhile, the White House will try to sell Congress on buying up the private sector's bad mortgage debt - to the tune of $700 billion (about $2,000 for every man, woman and child in America), which would come on top of the some $600 billion in bailout money already out there. The program would be run out of the Treasury Department, and is modeled on the Resolution Trust Corporation (RTC) of the savings-and-loan-crisis era.


Whew! What a day. What a week.


Like the stock market itself, the government's economic gurus flip-flopped last week like an Asian carp landing in a fishing boat on the Illinois River. If they effectively said "enough is enough" in letting Lehman Brothers go belly up, by week's end they'd flung the taxpayer door wide open. They did that because the market had signaled the government hadn't done enough to calm the panic roiling Wall Street. Thursday's and Friday's nearly 800 point climb in the Dow, as well as market bumps across the globe, suggested these latest moves were more to investors' liking.


The ironies here have our heads spinning. Indeed, it's worth noting that all of this is happening under a Republican White House, though arguably the two most powerful men in America are no longer named Bush and Cheney, but (Fed Chairman) Bernanke and (Treasury Secretary) Paulson. Suddenly government isn't the problem, it's the solution. The capitalists have brought us socialism. Ronald Reagan must be turning in his grave.


Beyond that is the whole "moral hazard" argument. Those who took foolish risks with other people's money are now being bailed out by a federal government taking enormous risks - time will tell how foolish - with other people's money.


That said, we have previously editorialized that an updated RTC would be worth exploring, and still feel that way, though caution is advised.


First, former Clinton Labor Secretary Robert Reich makes some good points in warning that we really don't know how much bad debt is out there. No one in their right mind buys a leaking hazardous waste landfill. Another economist has already dubbed any new, bad-paper-buying agency "Bailie Mae" - for bailout, presumably. Uncle Sam will have to know when to say when. The trick will be to protect the system without rewarding those who broke it.


Second, when the original RTC was created, the feds were following through on the responsibility they already had to the failed savings and loans because of their insured assets. Here taxpayers would be adding an obligation that would not be theirs, otherwise. Beyond that, as New York Times columnist David Brooks writes, "disposing of complex debt securities has got to be more difficult than disposing of commercial real estate," as was the case with the S&Ls.


Third, Reich suggests that beyond the liquidity crisis here is a fundamental dissolution of trust. Banks don't trust borrowers. No one trusts the titans of Wall Street, where the word "accountability" has become a profanity, just like the word "liberal" is to so-called conservatives who refuse to hold their own accountable for much of anything these days. The federal deficit is about to explode.


Finally, we sincerely hope that political considerations are not driving the White House's behavior here. On that front, both major-party candidates were very disappointing last week.


While Democrat Barack Obama seemed clueless at times - he's reportedly stopped speaking publicly on economic subjects without notes, apparently for fear of making a mistake his opponents can pounce upon - Republican John McCain especially seemed in over his head.


On Monday McCain said the economy was fine; on Tuesday he said it wasn't. Tuesday he insisted taxpayers shouldn't be "on the hook" for insurance behemoth AIG; Wednesday he said he'd changed his mind. Now he wants heads to roll, starting with the chairman of the SEC, while making sure no one gets "hung out to dry" when it comes to handing out government goodies - certainly not autoworkers he was campaigning before in swing state Michigan. Forget a new RTC; he wants a "9-11 style commission." We know McCain wants to keep national security on voters' minds, but say what? He has not been the epitome of calm under fire this week.


Look, America needs leadership that can look past the next election cycle, for a change, and act in the long-term best interests of the nation, even if it means personal sacrifice, even if the trade-off is some short-term pain, even with an election in less than seven weeks.


Peoria Journal Star