Aside from the fact that the various "rescues" that preceded Thursday's announcement of the Mother of All Bailouts did not achieve what was intended, there is another reason to pooh-pooh the optimism that has percolated through Washington and Wall Street during the past 48 hours: how long it took for the upside to be seen from a loosely comparable effort undertaken nearly 20 years ago. In the following excerpt from this week's Up and Down Wall Street column, "Going for Broke," Barron's columnist Alan Abelson spells it out [italics mine]:

Will the Grand Plan Work? Will piling on all those billions on billions atop a budget deficit that's already a cinch to shoot up to over half a trillion next fiscal year allow the badly winded economy to start a sustainable recovery?

Ben, remember, vowed to use helicopters to drop money from the sky, but now he seems to be gearing up to use 747s. Can the Fed run its printing machine full-time to churn out all those billions without a substantial infusion from increasingly pinched taxpayers? And won't priming the pump like mad drive the dollar back into the pits and force interest rates higher?

The plan, in all its extravagance, seems to have been thrown together on the fly, and once Congress gets a whack at it in the waning days before the lawmakers scurry off to the hustings, it may bear only passing resemblance, for better but probably for worse, to Paulson and Bernanke's handiwork.

Obviously, the unknowns greatly outweigh the knowns, which make those and myriad other questions tough or downright impossible to answer.

As Merrill Lynch's David Rosenberg observes, the fact that the government is suddenly so aggressive in coming to grips with an epic credit collapse is eloquent testimony to how the Fed and the Treasury "have consistently underestimated the severity of that collapse from the get-go."

He reminds us, moreover, that the original Resolution Trust Corp. was strictly about buying bad mortgages. So he wonders whether the new incarnation will also undertake the purchase of Level 3 assets, whose value is extremely problematic and, in any case, more than a little difficult to gauge, and which are a sizable and not particularly desirable presence in many banks' portfolios. And will the new RTC also buy credit-card debt, commercial real estate, leveraged loans "or the other mountains of bad debts out there?"

David cautions that the entire credit collapse to date has "reflected the unwind of the largest bubble of all time -- residential real estate. Meanwhile, a consumer-led recession is taking hold this very quarter for the first time in 17 years, and every consumer recession in the past was followed by a negative credit cycle of its own."

As to the euphoric market reaction, he thinks it's a bit much. In their stampede to buy, investors seem to be ignoring the depressing fact that what prompted such drastic action was the sorry state of the financial system, which isn't likely to change overnight no matter how vigorous the government exertion.

After the RTC was set up in 1989, he notes, it took two years for the economy to turn around, three years for housing to recover and a year for the stock market to bottom.

So what's the rush?

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