6. The failure of AIG will not lead to the failure of your insurance policies.

This distinction was made repeatedly by various economists smarter than I on the various cable news networks, but I still feel it's undercovered. The failure of AIG meant the failure of the trust-holding company, not the subsidiary that deals with our insurance policies. In large part, that subsidiary is perfectly fine and would have been purchased by someone else. Yes, the rates probably would have fluctuated, but we were never facing a huge failure of coverage.

We were merely facing a gigantic collapse of the investment banking and finacial sectors. Yay?

7. This failure of wall-street is not a failure of market, but a failure of policy and failure of accountability from our economic and political leaders.

Interestingly, I think the illegitimacy of this government bailout is something that both conservative and liberal economists will agree with. Milton Friedman, for example, would not criticize the greed of Wall Street, but he would certainly criticize handing over $700 billion in money without any form of market or governmental oversight. As described by that Slate article:

"His worldview began with a bedrock belief in people and their ability to make judgments for themselves, and thus an imperative to maximize individual freedom. On top of that was layered a trust in free markets as almost always the best and most magical way of coordinating every conceivable task. On top of that was layered a powerful conviction that a look at the empirical facts -- a comparison, or a "marking to market," of one's beliefs with reality -- would generate the right conclusions. And crowning that was a fear and suspicion of government as an easily captured tool for the enrichment of cynical and selfish interests. Suffusing all was a faith in the power of argument and the primacy of reason. Friedman was an optimist. He was convinced people could be taught the truths of economics, and if people were properly taught, then institutions could be built to protect society as a whole against the corruption and overreach of the government."

And really, isn't that the exact problem we're facing now with this new bailout bill? Not only does government demand that we give them money to boost up a failing system of nepotism and noncompetitive bids, but they also ask us to do so without oversight over our own money. This is the problem with the new bailout, through the eyes of Milton Friedman.

Our years of neglected, de-regulation coupled with our well-publicized tendency to give subsidies and bailouts have created a culture of risk immunity in Wall Street - and it has led to the bad loans and economic mismanagement that we now face. Everyone should take blame for this.

8. The government has a role to play in the economy.

From the same Friedman article:

"This did not mean that government had no role to play. He endorsed the enforcement of property rights, adjudication of contract disputes -- the standard and powerful rule-of-law underpinnings of the market -- plus a host of other government interventions when empirical circumstances made them appropriate. Sometime empirical circumstances could win Friedman some unexpected allies. Left-wing Mayor Ken Livingstone's congestion tax on cars in central London is an idea straight out of Milton Friedman. Friedman's negative income tax is one of the parents of what is now America's largest anti-poverty program: the earned-income tax credit, which was greatly expanded by Bill Clinton. And, most important, government had a very powerful and necessary role to play in keeping the monetary system working smoothly through proper control of the money stock. If there was always sufficient liquidity in the economy -- enough but not too much -- then you could trust the market system to do its job. If not, you got the Great Depression, or hyperinflation."

With the latest weakening of the dollar, it has become obvious that this government has failed in what it must do and has done what it must not do. Not only have we created a culture of high risk economic policy on Wall Street and created a system of cronyism with well-publicized no bid government contracts to the likes of Haliburton, but we have failed to keep the dollar strong and failed to eliminate deficit spending.

The first goal of the next administration should be balancing the budget. Failure to curb deficit spending and rampant borrowing by the treasury will only lead to another economic crisis in the future.

EDIT: Everyone should also check out Senator Tim Johnson's response to the government bailout plan.