The current financial mess

You have to wonder how bad things truly are...

It has seemed to me for sometime now that we've been on an unsustainable course, with our economy dependent on a huge daily influx of foreign capital to support the spending of both the American people and their government. A lot of smart people have agreed (or should I say that I've agreed with a lot of smart people? :-).

Bailouts of huge financial firms continue, with both the Federal Reserve and foreign investors stepping in to rescue companies who find their financial situations deterioriating overnight.

Who is responsible? Who should pay? How bad are things really? (Or in other words, are these bailouts of the financial elites really necessary to protect us all? Is the ship that close to foundering?)

Matthew Yglesias makes the excellent point that these types of bailouts (e.g. Bear Stearns) by the Federal government are a perfect justification as to why the rich (and, I submit, corporations) should pay higher taxes than the less well-off. If the government is essentially guaranteeing that you won't fail, then shouldn't you pay a price for that safety net?