Summary of Doctor's bill, from The Economist

When the current global financial crisis first became apparent during August of last year, the Federal Reserve responded by lowering interest rates to cushion the economy and by assisting commercial and investment banks in financing their holdings of securities. The Federal reserve was also in complete aversion to the use of public money for its operations at that point, because it believed the economy and the financial system to be solid and relatively sound. However, the crisis was gradually intensified by the growing prominence of the "shadow banking system" and its influence on the trends of global financial regulation. The remedy now proposed by Ben Bernanke, chairman of the Federal Reserve, and Hank Paulson, the treasury secretary, is one riddled by uncertainty. The Troubled Asset Relief Program(TARP), as it is called, is an emergency measure, primarily intended to avoid any worst-case scenarios and to evade a depression of the dimensions of 1929. The plan foresees for the authorities to spend $700 billion of mortgage-related assets for this purpose, but what seems to be largely disregarded are the wide-ranging differences between the current crisis and the one of 1929. Experience, in the case of today, is a poor guide, seeing as in the past, public money was only committed to financial systems when bank failures and insolvency were widespread. Under pressure to please the taxpayer, lawmakers have opted for a response to spare him, turning instead on Wall Street. TARP may mark a turning point, however. It could break the vicious cycle referred to as the mortgage market and it could restart lending. A lot, though, depends on the vigor of the response. Politicians today, are determined, not to "underdo" it, but TARP, as it stands now, retains a number of flaws. Most prominent is the danger that the problem it seeks to address has since mutated. With high degrees of uncertainty, however, comes the risk of weakening the dollar and of encouraging the reluctance of buyers to take responsibility, once the government decides to retreat its influence. Despite its inherent flaws, however, for now, what matters is the stabilization of trading prices. What comes next, is the need to adjust to a market more heavily regulated by the government than it has been in a long time.