Interest rates should not be kept as low as long

The plan Paulson is a solution to the crisis

It is a first urgent care to stop the bleeding, so that the patient, the economy, succumbs to the crisis. It is a plan to rescue and, as such, it does not have the ambition to provide long term solutions to "cure" the weaknesses of the current banking system. In fact, nothing is settled. And number of borrowers will continue to not repay their credits.

But is this the financial system bailout plan effective to stop the bleeding

Paulson's plan was a success first before even being subjected to the vote in Congress! The Secretary of the Treasury was to show as soon as possible in the financial markets, which were to give in to panic, the Government was determined to present a rescue plan to parliamentarians. In fact, the plummeting financial markets stopped the moment where the rumor spread to Wall Street that a text would be presented to the Congress. Of course, the original text was not refined nor well roughly trimmed, and Henry Paulson knew. But he was ambitious and he had the merit to exist. It is all which were at this stage. Similarly, it was not intended to assist mortgage holders. That being said, the plan revised and adopted in the second vote is better than the original project, to the extent it includes provisions to help borrowers tax exemptions and to better control of the credit system. If it works, it could even be a project pilot for the use of countries which are also facing the collapse of real estate bubbles, such as the Spain, Great Britain or the Ireland.

What solutions will have to be found in the long term to help the economy to start on a healthier basis

There is no doubt that it will have to review the regulation of markets, and regulators themselves. It is still difficult to know what will change for them, or which will survive to this inevitable restructuring. It may be that the Federal Reserve is given authority increased throughout the system, including major financial institutions as "hedge funds", investment banks and insurance companies.

What do you think of the argument that it would have been better left the banking system to collapse and then reborn from the ashes on bases cleaned, rather than providing the taxpayer-funded emergency exit to Wall Street

The argument has merit on the principle. I, indeed, considered it before rejecting it formally. The cost imposed by such a scenario to the financial system, the economy and society would be of such magnitude that is a choice which applies automatically to intervene. The average cost of an average US recession on all of its cycle is estimated between 500 billion and 1,000 billion. If we can reduce it by half, it is an excellent thing. Without even mentioning the human suffering it savings. After all, if there is a lesson from the great depression of the 1930s, it is that the Government has a role to play and it is not enough to wait for that cycle proceed naturally.

What will we retain of the current crisis

We live in a painful and frightening episode that could have been avoided. The Federal Reserve should have type fist on the table and put players in custody. Interest rates should not be kept as low as long. And of course, financial institutions should never have been able to practice the types of loans that they have performed. Hope that a new smart regulation will enable our economy to function better in the future.