The most destructive legacy of the Bush era will be the damage done by dogma and patronage to the perceived competence and good faith of the US government, from the WMD in Iraq fiasco to the tragedy of Hurricane Katrina and now the appalling mess the Treasury has made of dealing with the implosion of the financial system. When the definitive history of this period is written, there is no doubt that the Lehman bankruptcy will be seen as the critical event that accelerated and propagated a systemic crisis, and a decision driven by ideological rather than pragmatic considerations. The ultimate cost of that decision will be measured in the trillions of dollars. Markets have been further unsettled by yesterday's volte face on the TARP by Hank Paulsen, but as the whole scheme was deluded, good riddance I'd say. Despite the conspiracy theories, the Treasury grudgingly and belatedly realised ...

'This Bill is a huge cow patty with a marshmallow stuck in it.'Republican Congressman Paul Broun rejecting the bailout planWell, we can all smell those cow patties now Congressman, because you and your colleagues have driven a herd of buffalo down Wall Street. Intrade (www.intrade.com) is now quoting the odds on a new bailout deal being passed at 82%, and so the markets have rallied after yesterday's dramatic sell-off, but for how long? I have a lot of sympathy for the dissenting Congressmen, who have been feeling the visceral fury of their electorate (and not only because I profited greatly by being short). Hank Paulsen's stock is falling fast in Washington, his combination of arrogance and presumption having alienated many on Capitol Hill in recent days, and the original 3 page plan that amounted to a financial coup has been much improved (at least ...