John Cassidy at Portfolio.com details what amounts to an ongoing and growing program of bailouts for the banking industry.

There is, of course, the Fed Auctions of cash where worthless and near worthless securities are being used as collateral for loans, but there is more.

The Federal Home Loan Bank system, which actually dates from the Herbert Hoover administration, has been shoveling cash out the door, with an implicit federal guarantee. It’s government chartered, like Fannie and Freddie, which have now had their lending limits increased.

Cassidy’s recommendation, that the Federal Government buy distressed security at steep discounts, would be a good one, except that any discount would likely still be too much. The assets are illiquid, which means that they have next to no value right now.

The only way that we are getting out of this is by inflating our way out of this.

A lot of 401(k) and IRA accounts are going to be a lot worse off, but the alternative will look like 1932.