My first reaction was utter dismay, but as I learned more about the details, I began to think -- given that the government is going to spend at least $700 billion on unnecessary bailouts anyway -- that the plan announced yesterday to "invest" in various banks was not quite as bad as it appeared at first blush. This Register editorial expresses that view and I think explains the plan fairly succinctly.
The government will be getting preferred or non-voting stock that will require a 5 percent payment for the first five years and 9 percent thereafter, which is an incentive for the banks to buy back the stock if they're in any kind of decent shape at all, so it could turn out to be temporary.
However, as today's results demonstrate, the stock market didn't exactly render a favorable verdict. I think Bernanke and Paulson are going on the tube too much. When they're out there every day with a new warning or wrinkle, they create uncertainty rather than confidence. When people don't know what's coming next, the impulse is to get out of the market while the gettings good -- or at least without further losses