A couple of items from over the weekend are well worth reading for those who are interested in financial health of the U.S.

First, the Wall Street Journal’s Holman Jenkins, Jr. notes that Bank of America’s declining value reflects that the federal government’s bailout of Wall Street during the financial crisis of 2008 has been of dubious merit:

Let’s revisit the theory of the bailout. The government holds a safety net under the financial system, preventing a worse panic, with consumers and business cutting back spending more radically, with more people losing jobs, with more houses going into foreclosure.

It made sense on paper and underlies claims today that the government has been a net profiter from its bailout activities.

But it becomes apparent that the 2008 crisis isn’t over. And our bailout strategy?

In one presumed lesson of the Great Depression, a splurge of deficit-financed spending is supposed to support the economy while consumers and businesses get over their shellshock. But as George Soros noted to Der Spiegel, the U.S. government in the 1930s wasn’t saddled with huge debt. Unless today’s deficit spending is visibly directed at projects with a positive return, he says, it just frightens the public that the government itself is going bankrupt.

Meanwhile, this Bradley Keoun and Phil Kuntz/Bloomberg article reports that the Federal Reserve loaned an astonishing $1.2 trillion to Wall Street during the 2008 crisis. Interestingly, that amount is roughly equal to the amount that U.S. homeowners currently own on 6.5 million delinquent and foreclosed mortgages.

The foregoing does not surprise regular readers of this blog. Efficient operation of markets depend in large part on the allocation of losses based on who took the risk of loss. Remove the consequences of that risk and the result is that the politically well-connected profit, not necessarily those who carefully assessed and hedged risk.

Remember, it’s not rocket science.