Markets around the world are soaring on the news of a possible U.S. government bailout of the financial system. Treasury Secretary Henry Paulson says the plan will cost billions of dollars...

Paulson announced plans Friday morning for a "bold approach" that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a "temporary asset relief program" to take bad mortgages off the books of the nation's financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.

"We're talking hundreds of billions," Paulson told reporters. "This needs to be big enough to make a real difference and get to the heart of the problem."

I hate to be the skunk at the garden party, but am I the only one concerned that we will be piling on hundreds of billions of dollars in debt onto the taxpayer, already burdened by hundreds of billions of dollars (perhaps trillions of dollars) of unfunded liabilities? I am as happy as anyone that the stock market is going back up, but at what cost?

I once voted for a man who said that, "government isn't the solution to our problems, government is the problem". His name, of course, was Ronald Reagan. Don't think government played a role in this financial meltdown? Jonah Goldberg has a reminder for us...

The starting line for the parade of falling dominoes doesn't begin on Wall Street. Nor, alas, will the parade end there. But it really begins on the Capitol steps.

The self-proclaimed angels in Washington will tell you they've been working tirelessly to expand the American dream of homeownership by making mortgages available to people unable to plunk down 20 percent on a house. Franklin Raines, the Clinton-appointed head of Fannie Mae from 1998 to 2004, made it his top priority to make mortgages easier to get for people with poor credit, few assets and little money for a down payment.

The fine print to this noble intent was an ill-conceived loosening of standards. For instance, the Clinton administration re- interpreted the Community Reinvestment Act to politicize lending practices. Under the CRA, the feds forced banks to prove they weren't "redlining" (i.e., discriminating against minorities) by approving loans to minorities and various left-wing "community groups," bad risks or not.

Sen. Phil Gramm called it a vast extortion scheme against America's banks. Still, the banks were perfectly happy to pass the risky loans to Raines' Fannie Mae, which was happy to buy them up.

That's because Raines was transforming Fannie from a boring but stable institution dedicated to making homes more affordable into a risky venture that abused its special status as a "government sponsored enterprise." Fannie bought the bad loans and bundled them together with good ones. Wall Street was glad to buy up these mortgage securities because Fannie was deemed a government-insured behemoth "too big to fail." And others followed Fannie's lead.

The current crisis stems in large part from the fact that people who shouldn't have been buying a home, or who bought more home than they could afford, now can't pay their bills. Their bad mortgages are mixed up with the good ones. And thanks in part to new post-Enron accounting rules, the bad mortgages have contaminated the whole pile.

Bingo. Read the whole thing. Beware the man who says, "I am from the government and I am here to help you".