Bracket for a moment the massive and monumental questions of justice, equality, responsibility and moral hazard involved in this bailout. There are still huge outstanding questions about its basic effectiveness. The question as I see it are:

1) Is the credit situation as Paulson and Bernanke say it is? Banks basically went on strike for three days last week. Debt markets are still doing screwy things, but that’s a long way from a massive, economy-wide credit freeze. Otoh, a massive, economy-wide credit freeze really would be bad news. But what suggests it’s around the corner?

2) If the credit situation is that dire, why $700 billion? Why not parcel it out and see how the first, oh, $150 billion works?

3) What evidence is there to suggest that the mechanism they’re (lightly) sketching out for the purchase of these troubled assets: a reverse auction with a single buyer, will work. As I understand it,no one ever in history has done anything remotely like what they’resuggesting: basically using the Treasury’s massive liquidity to bootstrap a market (with one buyer!) for a whole bunch of classes ofassets that no one can price.