$250 BILLION NOT ENOUGH???

If U.S. banks get $250 billion in new capital, that can turn into over $2 TRILLION in new loans. I'd think that would be a huge help to the credit crunch, especially considering what the Europeans have been doing but the stock markets don't seem to think so and neither does the prime minister of Japan:

Japan Premier Aso Says U.S. Must Expand Bailout Plan (Update3)

By Takashi Hirokawa and Sachiko Sakamaki

Oct. 16 (Bloomberg) -- Japan's Prime Minister Taro Aso said the U.S. government must accelerate steps to bail out financial institutions to help arrest plunging stock values.

``People think the $250 billion plan is insufficient and that's why markets are falling,'' Aso, 68, told lawmakers today in a reference to the U.S. initiative to buy stakes in thousands of financial firms. ``They need to make a quick decision to inject capital.''

``Looking at Japan's experience from 1997 to 1998, unless you take action quickly, you end up paying a higher price,'' Aso said during a budget committee debate in the upper house of parliament, which is controlled by the opposition Democratic Party of Japan.

Even a believer in the Free Market Fairy thinks the government had to directly invest in the banks:

Credit crisis overturns free-market ideology
The next president will decide whether the shift away from laissez faire is permanent.

By Peter Grier and Ron Scherer Staff writers of The Christian Science Monitor
from the October 15, 2008 edition

"It's the least bad of the choices they faced," says Gerald O'Driscoll Jr., who until last August was vice president of the Federal Reserve Bank of Dallas.

Mr. O'Driscoll, now a fellow at the free-market-oriented Cato Institute, finds the bailout to be distasteful. He does believe that it addresses the root problem of the freeze in bank lending, however.

"Hopefully, this will bring in more private capital [to the banking system]," he says.