Investor’s Business Daily believes that this time government is intervening in the right way to help solve the economic crisis: 

Like so many others, we believe that government should largely remove itself from functioning markets. But in a case such as this, where a market has been seriously damaged due to regulatory excess, an obligation exists to help undo the damage.

That’s the case now with the subprime crisis and housing collapse, both largely due to decades of congressional incompetence.

With world credit markets seized up and little to show for piecemeal U.S. efforts to deal with the growing financial panic, Paulson and others on the Bush financial team late last week shifted course, crafting a systematic answer to the markets’ meltdown.

This was leadership writ large… 

His controversial decision to create a new financial entity, modeled broadly on the 1980s-era Resolution Trust Corp., may just spell an end to this financial crisis. Congress, which has mostly sat on the sidelines during this crisis, should approve it right away.

Unlike the RTC, which owned actual properties, the new agency that Paulson’s Treasury is creating will buy up the impaired mortgage-backed securities and hold them for resale when the market turns favorable again.

For ailing financial markets, this was welcome tonic. At this point they care less about details of the agency than limiting the contagion of the subprime crisis so it will no longer contaminate global banks and investors’ balance sheets. Mission accomplished.

That’s why markets rallied so strongly Thursday and Friday, with the Dow industrials ahead 779 points, or 7.3%, and the Nasdaq up 175 points, or 5.8%. Bourses in London, Paris, Frankfurt, Tokyo and Hong Kong, among many others, also rebounded sharply.

Paulson’s move will have deep, and perhaps lasting, impacts on global markets. Foreign central banks had virtually thrown their hands up in despair over their inability to deal with the crisis. But in just three days, Paulson and other top finance and regulatory officials in the Bush administration cobbled together a world rescue.

In addition to Paulson’s new entity, Bernanke’s Fed extended $180 billion in credit to practice that had contributed to the growing financial crisis.

These U.S. moves should erase the doubts that existed both in the suites of global market makers and in the kitchens and living rooms of Main Street, U.S.A., over whether the American government would fiddle while the world economy burned.

Just this week, Germany’s Der Spiegel headlined a story: "The World As We Know It Is Going Down." Well, it isn’t. Thanks to Paulson and Co., America has reasserted global leadership at a time when many thought it was lost.

It finds fault with Barack Obama’s analysis and his 4-point remedy. His would be the wrong way.  

And what would Obama do instead? We’re beginning to find out. In a four-point action plan Obama presented on Friday, he goes beyond "hope" and "change" oratory and moves on to what really matters to him: the big-government spending he’s been selling all election.

And here’s what Obama proposes:

• Point one, Obama calls for subsidies to "working families" to beat high food and energy prices. The problem: High food and energy prices won’t be helped by subsidies, but by more supplies. The real solution is to force a Democratic Congress to allow domestic drilling for oil. Thus far, Obama isn’t even "present" on that one.

• Point two, dubbed "mutual responsibility and reciprocity," calls for banks to subsidize bad borrowers to "protect homeowners and the economy." This would eliminate personal responsibility. Demagoguing false details — such as about bankers getting golden parachutes, instead of 25,000 of them losing their jobs — Obama insists the solution is simple: Banks shouldn’t foreclose on delinquent home buyers. Obviously, he hasn’t heard of how bad loans drained Japan’s economy of its vitality for a decade.

• Third, Obama seeks "new oversight and regulations of our financial institutions." That means forcing new bureaucracies and regulations into the private sector, the very phenomenon that has made navigating our health care industry such a delight.

• Fourth, Obama seeks to empower unelected foreign entities to the same "globally coordinated (rescue) effort." But Bernanke and Paulson have already done the heavy lifting, as the rest of "the world" has done next to nothing. One more global bureaucracy won’t make America’s financial system any healthier.

Obama makes a final point by blasting the failure of "common-sense regulation and oversight," to the financial system.

He ought to bring this up with fellow Democrats in Congress. In the 1990s, Rep. Barney Frank blocked key reforms even as he took campaign cash from banking interests. In 2004, President Bush attempted to revive the reforms, but Democrats blocked them.

Today’s bank crisis isn’t due to the inherent evil of the private sector, as Obama claims. It’s due to Democratic leaders who were bought off by political donations and hostile to reform.

Obama, curiously enough, is one of the top recipients of cash from Fannie Mae and Freddie Mac. Small wonder, then, that his main election argument would expand the scope of government by using the banks’ subprime woes as leverage.