Is the Krugman rally an overreaction?

Rally on! Rally on! Krugman!

LETS DO THE SUBPRIME WARP AGAIN!
(THE END OF MORAL HAZARD)
(Lets Do the TIME WARP, Rocky Horror Picture Show)
WilliamBanzai7

It's astounding, markets are fleeting
Greenspan's Madness takes its toll
But listen closely, not for very much longer
We've got to regain control

I remember doing the Subprime Warp
Drinking those moments when
MORAL HAZARD would skip past me and the greed would be calling
Let's do the Subprime Warp again...
Let's do the Subprime Warp again!

It's just a AAA CDO to the left
And then a backstop CDS to the right
With your hands on your FLIPS
You bring those TOXIC TRANCHES in tight
But it's the ALT-A thrust that really drives you insane,
Let's do the Subprime Warp again!

It's so dreamy, oh fantasy free me
So you can't see me, no not at all
In another dimension, with fraudulent intention
Well-deluded, I see all
With a bit of a mind flip
You're there in the SHADOW BANKING slip
And nothing can ever be the same
You're spaced out on SECURITIZATION, like you're under sedation
Let's do the Subprime Warp again!

might be totally broken because banks are now just borrowing from the Fed and other central banks rather than from each other.

this is likely to revert to the status quo ante rather rapidly -- after all, by not loaning each other money at reasonable rates, these banks are losing money, and greed will out.

I think the next crisis is going to come about as a result of these multi-trillion dollar bailout of the financial system, as debt laden third world nations demand the same kind of giveaways in the form of debt forgiveness by industrialized countries. After all, if the wealthy countries of the world can avert financial disaster by printing money, why shouldn't the worlds' poor nations demand that those same nations forgive their debt (in essence, by printing even more money?)