JONATHAN MACEY: The Government is Contributing to the Panic. “It’s time to let markets do their messy work.”

I do think that “panic” is the right term, as in “the panic of 2008.” The system is awash with money and credit — enough so that I’m quite worried about inflation down the line — but nobody will do anything with it because they’re . . . panicked.

Plus this: “If the SEC had done half the job in ferreting out fraud and funny accounting that short-sellers have done, our capital markets would not be imploding. Now short-sellers, like other market participants, are threatened with new restrictions on their activities as Congress begins to hold hearings on the crisis in the capital markets and politicians and regulators turn their focus to the shibboleth of market manipulation.”

UPDATE: Speaking of panic: Investors’ Real Fear: A Socialist Tsunami. (Via NewsAlert).

ANOTHER UPDATE: One of my hedge-fund readers emails:

The thumbnail future market history of this month is likely to include the phrase “correctly discounting the economic fallout of an Obama presidency and hard-left Congress repeating the failed frenetic economic policies of the 1930s”. Let’s just hope it doesn’t take a re-run of the 1940s to extract us.

Ugh. Thanks for that comforting thought. And those enthusiastic for New Deal type solutions should be required to read Amity Shlaes’ book on the subject.

Or at least this: FDR’s policies prolonged Depression by 7 years, UCLA economists calculate.