How would you like to be the guy deciding how to handle the US economy today? Should we continue to inject money into the financial market to prop up businesses that have an overwhelming burden of debt and increase US debt or should we allow these companies to fail and increase worries and suffering? The government can't buy every company. It's anti-capitalistic. Yet we can't stand idly by and watch the US economy crash. That would be...well, bad.
On one hand you can lower interest rates and make it easier for debt-ridden companies to borrow money from the government but stoke inflation fears or you can keep interest rates the same or raise them and stregthen the dollar but hurt companies that need cash.
At the end of the day, this correction or adjustment or crash, depending on your view, is going to happen. The government isn't in a position to stop the bleeding and things won't get back to normal until some companies fail and some people are hurt. That's just a fact. Housing prices must stabilize before the mortgage mess is finally sorted out and that's when we'll know the real damage. All the government can do at this point is try to cushion the landing or make the descent a little slower. Instead of a burst, we're trying to just let a little air out at a time. Maybe that's better but either way the balloon will eventually be empty. But don't fret, things will turn around...it's just going to be painful getting there.