Great stuff today from Dean Baker (emphasis added):

Why Bail? The Banks Have a Gun Pointed at Their Head and Are Threatening to Pull the Trigger
By Dean Baker - September 29, 2008, 6:09AM

. . . I've heard lots of phony stories. Much of the country's political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system (I actually had taken the latter seriously). These stories are absolutely not true.

There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.

At this point I cannot identify a single good reason to do the bailout.

The basic argument for the bailout is that the banks are filled with so much bad debt that the banks can't trust each other to repay loans. This creates a situation in which the system of payments breaks down. . . .

That is a very frightening scenario, but this is not where things end. The Federal Reserve Board would surely step in and take over the major money center banks so that the system of payments would begin functioning again. The Fed was prepared to take over the major banks back in the 80s when bad debt to developing countries threatened to make them insolvent. It is inconceivable that it has not made similar preparations in the current crisis. . . .

There has been a mountain of scare stories and misinformation circulated to push the bailout. Yes, banks have tightened credit. Yes, we are in a recession. But the problem is not a freeze up of the banking system. The problem is the collapse of an $8 trillion housing bubble. . . .

Given the loss of housing equity, I have actually been surprised that the downturn has not been sharper. Homeowners had been consuming based on their home equity. Much of that equity has now disappeared with the collapse of the bubble. . . .

This is the story of the downturn and of course the bailout does almost nothing to counter this drop in demand. At best, it will make capital available to some marginal lenders who would not otherwise receive loans. . . .

For the record, the restrictions on executive pay and the commitment to give the taxpayers equity in banks in exchange for buying bad assets are jokes. These provisions are sops to provide cover. They are not written in ways to be binding. (And Congress knows how to write binding rules.) [TELL 'EM Dean-o! - fairleft]

Finally, the bailout absolutely can make things worse. . . .

There's more...

Maybe it's serendipitous after all, that this first debate on Friday is on international  affairs/foreign policy, rather then domestic and financial policy.

Because, I think there might be a pitch coming right down the middle of the plate, if Obama sets up the moment and swings for the fences on this one.

After watching the Sixty Minutes piece, it's clear McCain is stubbornly holding on to the Surge as his "trump card" and will, imho, find a moment to play it during the debate.

There's more...