There are two dimensions to the crisis — immediate crisis managment and long-term systemic reform.
On the first, both stock market and credit market responses to the seemingly endless string of “fixes” have been uniformly negative. Why? Because the leadership of the Treasury and Fed appeared panicked in warning of immense danger if something is not done immediately. But then when given the authority and money to act, the US Treasury does not act. “We’ll be ready in a few weeks.” Hardly reassuring. Were they incapable of forward planning? In the meantime, the original scare talk coming from Washington has made investors predisposed to believe the worst and nothing has happened to alleviate that concern. Lesson: Don’t say the sky is falling without acquiring a sturdy umbrella — and then opening it.
The second is the important issue of what happens after the crisis simmers down, which it eventually will. There are two diametrically opposite points of view, call them the Greenspan doctrine and the Volcker view. The Greenspan doctrine is that free markets overshoot and there is nothing anybody can do about that. But the good that they do during booms in creating new businesses, houses, etc. outweighs the damage done in the crashes. So don’t re-regulate the financial system.