Krugman:

this could turn into the wrong kind of rescue — a bailout of stockholders as well as the market, in effect rescuing the financial industry from the consequences of its own greed.

I’d say that the probability is 100% that it will turn into the wrong kind of rescue. There is no immaculate conception for bailout legislation. There is no non-distorting rescue when the costs are being externalized to taxpayers.

On greed, let me repeat: If unusually many airplanes crash during a given week, do you blame gravity? No. Greed, like gravity, is a constant. It can’t explain why the number of crashes is higher than usual. And let me add: This isn’t a morality play. What we’re seeing are the consequences of monetary-policy distortions of interest rates and regulatory distortions of incentives, amplified in some degree by private imprudence, not the consequences of blackheartedness.

Today’s U.S. political system isn’t going to follow Andrew Mellon’s infamous advice to Herbert Hoover: “Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.”

This is the spurious "quote" that refuses to die, apparently because it offers such a convenient caricature. To summarize: the words in quotation marks are words that Herbert Hoover twenty-three years after the fact attributed to Mellon, in a transparent effort to picture himself by contrast as an enlightened hands-on policy-maker. There is no other source. The sentiments of the “infamous advice” are inconsistent with Mellon’s actual (public) statements expressing anti-liquidationist views before and after 1929, and with the policies he supported as Treasury Secretary.