Jim Manzi has some useful thoughts:

Commentators on both the Left and Right seem to think that if only we could get the right person to take over these companies and clean up the financial mess, everything would be OK. All it takes is somebody competent and honest, because the answers are so obvious. A rotating series of scapegoats has been created. Paulson? Fool. Geithner? Moron. Liddy? Stooge. It’s funny how their idiocy didn’t seem to surface so much in their prior careers.

Maybe the issue isn’t with the men we’ve selected, but with the problem we’ve asked them to address. Some problems don’t have solutions. The American electorate seems to be intent on re-learning the lesson that how to effectively manage socialized means of production is one of them. The tuition for this course tends to be pretty steep.

I’m sure that Liddy is deeply regetting that he took the job, particularly given the (lack of) financial compensation. The notion that a government, or any one person, is smart enough to run an economy is what Hayek called the fatal conceit.

[Update early evening]

James Pethokoukis:

It’s cliché to say there’s a lot of blame but going around — but there is a lot of blame to go around.

Everywhere you turn in this mess, you can find government right there. To say this is a private-sector failure is ridiculous. It’s like Forrest Gump, where he keeps showing up at historic moments. Everywhere you look in this mess, again and again, you see government.

The most infuriating thing about these clowns, both in Washington and the press, is how a non-existent free market and “deregulation” keeps getting falsely blamed for this as an excuse for bigger government and more regulation.

Tom Maguire (unlike the media) is on the case. I particularly like this comment:

I’m beginning to think the general journalistic reaction to this whole thing is “But I went to Journalism school because they said there was no maaaaath!”

Or logic.

Bupkis:

…that prediction and the job calculations cooked by the president and his economic advisers have already been proven wrong. A Republican insider on Capitol Hill explains that the “forecast for saving or creating jobs is based on the stimulus ensuring that the unemployment rate not exceed 8% between now and 2014.” But we are already passed the 8% mark.

What would have happened without the stimulus? According to the administration’s calculations, we would then hit 9% unemployment. But that is the very figure that many economists now predict we will hit in a matter of months. Some predict we will hit 10%. Four states have already hit that figure.

This is the biggest financial fraud in history. It makes Madoff look like a humanitarian.

In discussion from this post from a couple days ago, a commenter makes what seems to me a plausible point:

I firmly believe that the destructive effects of FASB’s change to a mark-to-market accounting standard in November 2007 cannot be overstated. It never made any sense, and the proof of this is that neither Paulsen nor Geithner have been able to do what they set out to do, which was to buy up the so-called “toxic assets.” The problem? They can’t determine a fair price for assets which have been devalued on paper to effectively nothing because of the new mandated accounting standards.

Yet Geithner said recently that these assets have “inherent value” that is not reflected by their current market price, which is an implicit repudiation of the mark-to-market standard. It’s also the reality he has to face. Hence the problem, a kind of Catch-22 of his own making. (He and others, to be fair.)

To buy up the toxic assets at higher than mark-to-market value would admit what everyone knows but won’t speak: that these assets are worth a lot more than the mark-to-market value and always were. If the government hadn’t forced the financial companies to grossly understate the value of their assets in the first place, this banking crisis might never have occurred or at least not nearly at this degree of severity.

Furthermore, if Geithner believes the assets are worth more than the mark-to-market value, then why not simply change the FASB rules back to what they were pre Nov2007 and let the financial companies mark them up on their own balance sheets instead of selling them back to the government? Same reason. Because if the government were to now admit that these assets are, in fact, worth quite a bit more — and that they always were — the smoking gun would be revealed. And so would the fingerprints of all those who helped pull the trigger.

I would hate to think that this is behind the resistance to restore the status quo ante 2008, but sadly, it wouldn’t be surprising. It would also be amazing to think that we wrecked the world economy with a single rule change, and could undo much of the damage by reversing it, but it can’t be ruled out.

[Update a few minutes later]

Commenters are accusing me of naivety, or lack of understanding of the situation, and in rereading my post, I can understand why.

No, I don’t really believe that if the rule hadn’t been changed, all would now be hunky dory, or that by changing it back, housing prices would skyrocket and all would be well with the world, and we’d rewind back to 2006. I understand that there was a huge bubble, perhaps more than one, and that supply and demand had to correct at some point. It’s why, after buying our house in South Florida five years ago, (unlike some of our neighbors) we weren’t going crazy and flipping condos a couple years later.

I am just pointing out that it might have played out differently, or more gradually, and perhaps even in a way that might have resulted in less panic in Washington last fall. I do think that our biggest problem now is not the underlying problems with the economy, which always work themselves out if allowed to, but panicked governmental responses to them that are exacerbating the situation. I do think that mark to market, or at least a sudden change in the rules, played a role in that. I think that it forced fire sales in the banking sector that might have been handled more gradually.