With most of the media focused on Obama's speech about health care on Wednesday, this item got largely overlooked.

Sweeping regulatory reform of the financial sector-thought to be a 2009 legislative given just four months ago-may now come down to a piece-meal approach, with the White House and its allies happy to see a couple prized components signed into law this year.

Note: this is a cross-post fromThe Realignment Project.

“A term like capitalism is incredibly slippery, because there’s such a range of different kinds of market economies. Essentially, what we’ve been debating over—certainly since the Great Depression—is what percentage of a society should be left in the hands of a deregulated market system. And absolutely there are people that are at the far other end of the spectrum that want to communalize all property and abolish private property, but in general the debate is not between capitalism and not capitalism, it’s between what parts of the economy are not suitable to being decided by the profit motive. And I guess that comes from being Canadian, in a way, because we have more parts of our society that we’ve made a social contract to say, ‘That’s not a good place to have the profit motive govern.’ Whereas in the United States, that idea is kind of absent from the discussion. So even something like firefighting—it seems hard for people make an argument that maybe the profit motive isn’t something we want in the firefighting sector, because you don’t want a market for fire. “
— Naomi Klein

Introduction:

As I discussed in part 1 of this series, “Public Virtues” will examine those areas in which the public sector has an economic advantage, and compare and contrast those where the private sector is supposed to have an advantage. And where better to start than the profit motive, the first principle of capitalism that’s been held up, not just as an explanation of why corporations get better and better at making widgets if people give them money, but why the public sector is inherently and unalterably inefficient, technologically stagnant, and uncompetitive. The profit motive, as everyone knows who’s lived in the capitalist world, basically holds that because people want to make a profit, they are pushed towards the maximization of their resources, and thus seeking to make profits, they make the system as a whole more efficient and productive.

However, most honest thinkers, i.e those not professionally involved in proving that capitalism is infallible, admit that the profit motive only spurs innovation and efficiency where it actually exists. Where it doesn’t, you wind up with market failures.  And where the market fails, that’s the natural place for the public sector. The debate, however is how often and where this happens.

The unemployment rate climbed to 9.7% last month, a 26-year high...and the media told us that this is a good thing.

“[W]hether or not today’s and other recent reports overstate the case, the improving trend of the labor market after the autumn/winter carnage cannot be denied.

Ah, yes. The trend.
First of all, let's be clear what trend we are talking about. We've lost a lot of jobs, and we are still losing them - that is the trend.
Trying to spin that into a good thing is like putting lipstick on a pig. For the job situation to be "improving" requires that we stop losing jobs.

The report out today says that the Federal Housing Administration is having the busiest year in its history.

Almost a year after the federal government launched its rescue of the housing market, nearly one in four new mortgages is insured by the Federal Housing Administration.
...
FHA loans also have become more popular because of the demise of many subprime lenders, which sometimes allowed buyers to purchase a property with nothing down and no documentation of income.

Remember what went wrong with the subprime housing market? People getting easy credit with "no skin" in the game buying houses they couldn't afford. Oh sure, there was massive fraud too, but that wasn't the cause of the bubble.
And yet, the federal government seems determined to do the exact same thing that got us into trouble in the first place. Only this time it is your taxpayer dollars that are financing it.