As the market falls...

“Nobody has a handle on when we’re going to emerge from this economic malaise, what the economic and societal landscape is going to look like and what earnings are going to be.” ...financial analyst Dan Greenhaus, commenting on Friday's fall in the market

It becomes clear that we're in for is what market reporters are calling "a fundamental restructuring of our economy."  The pain that is being felt seems to be centered on individual's jobs and homes, rather than on the institutions that failed us.

Reporting on the latest job stats and their effect on confidence in the market, the New York Times reports that "most economists now assume that the American fortunes will not improve before near the end of the year, as the Obama administration’s $787 billion emergency spending program begins to wash through the economy." 

“There was a huge increase in uncertainty and a huge hit to confidence which caused a large rethinking among businesses,” said Ethan Harris, co-head of United States economics research. “That caused a big downshift in employment.”

In similar crises, like the stock market crash of 1987 and the near collapse of the enormous hedge fund Long Term Capital Management in 1998, dysfunction continued to grip markets for about six months, Mr. Harris said, suggesting that this episode may be nearing its end.

But history also shows that when fear lifts, the economy returns not to normalcy but to wherever it was when the crisis began, Mr. Harris said. That means that even if order is restored to the financial system, the economy will still be staring at a recession.

And order cannot be restored, many economists say, until the Obama administration creates and executes a credible plan to remove the bad loans choking the balance sheets of financial institutions.

“The 800-pound gorilla is whether we face up to the bad loans in the financial system,” said Alan Levenson, chief economist at the trading firm T. Rowe Price in Baltimore.

Of course the banks aren't using bailout money, as expected, to loosen up credit.  In some cases they're using it to buy up other banks.  Many of us are asking why the administration isn't forcing them to do what needs to be done.  The answer, apparently, is that old cry of  "nationalization."  You can force a person to leave his home, but you can't force financial institutions to use our money to the benefit of the nation's economy rather than their own interests. 

The "fundamental restructuring" must include a new set of rules for the "free" market, or we're likely to see some serious unrest in the decades to come in our "societal landscape."