In New Delhi
and Hong Kong,
they all know that it won’t be long…
He gives orders
which no one hears
King’s Hat fits over their ears…
–Brian Eno, King’s Lead Hat

In a logical and orderly world it wouldn’t be fair to judge Paulson’s 700 billion dollar gambit a failure this soon. We do need to account, however, for the haste demanded last week–we were perhaps mere hours from a complete meltdown in the financial markets and every minute lost to critical examination only magnified the approaching disaster, or so we were told. Still, the plan hasn’t yet been implemented; how can we judge it even a partial failure at this point? Because its mere arrival on the scene was supposed to put the forces of irrationality to rout, by virtue of its size and speed.

The plan was designed to calm panicked markets. Remember, according to Paulson et al, these investments are not truly worthless (despite the fact that they cannot find buyers in the market–the very definition of worthless–and despite the overdue collapse of the housing bubble that was their fundament). Of course, if you want to make this argument you should probably coin a euphemism for “toxic investments” in the same way you derived one for “bailout.” But compelling fear was of a higher priority than the sop of recoupment down the line.

The market, once so imperious and oracular, is now to be humored, like our sadly irrelevant president, despite its urgent signalling that we’ve built our post-industrial, post-internet economy on an unsustainable model of debt and crony capitalism, all while congratulating ourselves on our free market integrity. It becomes harder and harder to conceal this. It’s alright after all that we’ve never truly had a free market–which is both a reasonable expectation of our imperfection in all things and not an argument against the value of free market principles. It seems enough that the arc of our progress should bend toward that ideal. Unfortunately power is such that the powerful will use the promise of an ideal to their ends, wrecking it along with us. Of course there’s only so much damage our leaders can do to that which they so quickly abandon; in their hands free market principles, once put to the test, endure the ignoble fate of the coward’s rifle, never fired and only dropped once.

The immediate response of an already jittery equities market–which was supposed to have been pacified by congressional and executive desperation vainly masquerading as decisive action–was to duck and cover in response to the nuclear blast of political panic. Nobody was fooled. The stock market has since lost ten percent of its value–something like a trillion and a half dollars, which is not far from the true cost of the various bailout moves proposed thus far. Recall that immediate action was deemed necessary to preserve the broader economy and prevent the evaporation of the nation’s retirement and pension plans, basically by proposing we borrow another 700 billion dollars from the Chinese and others before turning it back over to them. How’s that worked out so far? The plan is beginning to look like a desperate attempt to sustain the unsustainable, or merely disguise it.

We were warned that we couldn’t go at this “piecemeal”–which was a way of deriding any measured or directed approach as half-assed; what we’ve gotten seems quite piecemeal after all–massive pieces hurled in flailing desperation. The plan does not address the gigantic correction in an unsustainable housing market because it cannot; there is no way to finesse, or make the public amenable to, trillions in illusory value being surrendered back to reality. Paulson’s is as much a political action plan as a financial one, though its authors cannot acknowledge this. Or perhaps our leaders have become incapable of recognizing just how much of their haste is motivated by personal interest. It’s become second nature after all for them to confuse factional and party goals, as well as personal ambition, with the greater good.

It may very well be that there are no answers–Bernanke’s actions today indicate that our leaders have none. What they do have are political and professional interests of their own to defend. In this environment, where all options are awful, we can be assured they will instinctively see the virtues of those solutions that serve their particular needs.