Now that we've spent up to 850 billion dollars on the bailout package, the natural question is - "When will we see the benefits of this stimulus package?"

The answer, unfortunately, is probably not any time soon.

First, let's have another update on the composition and state of the current crisis.

This is more easily said than done.

The 14-month-old credit crunch has entered a frightening new stage—one in which even healthy sectors are vulnerable and contagion is spreading to Europe and Asia. An explicit guarantee from the U.S. government has succeeded in keeping money flowing to prime home buyers through the Sept. 7 takeover of mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE), which were able to sell $12.8 billion in debt in September. But that's not helping other parts of the U.S. economy, where manufacturers, car buyers, and local governments are struggling. One sign of the squeeze: Total nonfinancial investment-grade corporate debt issuance was only $10.5 billion in September, down from $41 billion a year earlier, according to Thomson Reuters

Essentially, the current credit crunch is so bad that productive, profitable companies are being denied loans for expansion. Without the ability to spend, businesses cannot expand and the amount of investment goes down, and jobs might even be lost as companies struggle with payroll. In order to fix this credit crunch, banks must feel safe to loan again and, unfortunately, that's more of a mindset problem than it is an economic problem solvable by government action.

This crisis in the credit market is exacerbated by a similar crisis in consumer confidence. With the record amount of jobs lost this past month and the unending amount of coverage of our incoming recession, the consumer isn't buying much - especially the middle class which makes up the bulk of consumer spending. Furthermore, even those who still have jobs have seen their earning rates slow, and the lack of credit liquidity means that we'll all be seeing less Christmas bonuses this year. So in short, the middle class is running out of money and not spending what they have, which means less capital flow in the market and a further slowdown in the economy.

To compound matters further, this credit epidemic has now gone truly global, with the EU debating how to best deal with the crisis, Russia lending banks money to stem the crisis, and Asian markets are falling from Riyadh to Tokyo, so there is unlikely to be a sphere of the world untouched by this crisis. So essentially, this problem is a combination of lack of consumer confidence and the failing of the credit markets, and it's world-wide in scope.

That said, this bailout is not a direct stimulus package. Rather, it is aimed at recovering market value for specific bad mortgages in hopes of stimulating capital flow and unfreezing the credit markets, but in order for it to take effect, a lot of pre-planning and bureaucratic arrangement must occur first.

The work needed to accomplish that is well under way, by a team of Treasury officials led by Ed Forst, a Goldman Sachs (GS) alumnus who left the firm this summer to become a senior administrator at Harvard University. In late September, Paulson asked him to come to Treasury to work on the bailout program. Forst, who is on a temporary contract, began to outline the plans for implementation even as Congress wrangled over the details. With the deal now done, Treasury hopes to hire five to 10 asset managers to oversee the purchases, each of whom will manage up to $50 billion in assets. It also hopes to hire another couple of dozen bankers, lawyers, and accountants needed to run the program, with much of the hiring expected within the month.

These managers must then try to re-establish prices by deciding which stocks and mortgages they should buy and at what price. Some banks can't take the hit of selling their most dangerous assets at market value, so they'll also need to decide which banks can be treated as preferential customers and which ones as normal consumers. In short, chances are that when everything is arranged, we'll be at the precipice of, if not well into, the next administration.

In the end, though, I still think that the fundamentals of the bailout were sound. Something had to be done to curb the increasingly shaky credit markets, and something must be done to ensure that banks do not collapse. The cost to the American public imposed by the bailout is certainly high, but the cost of inaction would have been much greater, especially considering that the IMF is estimating our losses from this financial crisis at around 1.4 trillion dollar as is.

So how will we know if the bailout is working? Well, we'll know when the credit market recovers and consumer confidence returns, and that recovery will be seen by stabilizing real estate values, rising new home sales, increased lending by banks, slower rates of job loss and declining and stabilizing oil prices. Until then, the economy cannot recover. Either way, with the markets continuing to contract and job losses continue to grow and chances are, it'll get worse before it gets better.