PORTSMOUTH - President Bush, in his talk to the nation on Wednesday evening, basically absolved the federal government of any blame in the financial crisis that current faces the country. However, Dean Baker, co-director of the Center for Economic and Policy Research, placed the burden for the debacle squarely on the shoulders of federal regulators.

“We got here because of a horrible failure of the regulatory process,” Baker said during a teleconference Thursday. “I and others have been screaming about this since 2003. It was inevitable to have a collapse like this.”

As for the $700 billion bailout package proposed by the Bush administration and being worked on by congressional leaders Thursday, Baker said he was not in favor of it. Baker said, and it was subsequently confirmed by the Associated Press, that under the bailout plan negotiated by federal legislators Thursday, the Treasury secretary would get $250 billion immediately and could have an additional $100 billion if he certified it was needed.

The last $350 billion could be blocked by a vote of Congress under the arrangement, designed to give lawmakers a stronger hand in controlling the unprecedented rescue.

Baker was critical of that plan as well.

“The logic for the $700 billion was to solve the immediate problems and have sufficient money in case something happens in the future,” he said. “Now we will have only a portion of that money available.”

During a subsequent teleconference with New Hampshire’s senior Senator Judd Gregg, who was one of the eight or nine people who negotiated the latest plan, he was asked whether he thought the plan would work.

“I’m confident that if we don’t do anything, the results will be catastrophic,” Gregg said. “Will it work? I sure hope so.

“We’re running out of options and the markets aren’t going to wait for the politics of this to work out,” Gregg said.

Baker said he was not sure exactly what the plan is intended to do.

“The President (in his Wednesday night speech) framed it as a recession-fighting tool, but it seems to be nothing other than a bailout of banks,” said the former senior economist at the Economic Policy Institute.

Baker believes there are three major results that have come out of the failure of the U.S. financial markets. The first is that the U.S. will no longer be seen as the place in which developing countries can make safe investments.

“The U.S. is no longer seen as the leader,” Baker said. “China is the country that countries are looking to for investment deals and trade packages.”

The second result is that with its “financial structure in shambles,” U.S. leadership in the world financial markets has been displaced, the co-director said, and the third result is that, as a result of the actions of both regulators and leaders of financial institutions, America’s financial markets are no longer seen as a trustworthy.

“U.S. markets will pay a high price for their conduct over the next seven to eight years,” Baker said.

The way to bring confidence in the U.S. financial markets back, the former CEI analyst said, is to downsize what he called “the bloated financial sector,” and to export more and import less. Doing this will involved a good deal of pain for Americans, Baker said.

Also on the conference call was Rudy deLeon, a senior vice president at the National Security and International Police group at the Center for American Progress Action Fund in Washington, DC.

deLeon, who was formerly a senior Department of Defense official, said the national debt, which was estimated to rise to $500 billion in the next fiscal year without the bailout, will hurt the military and homeland security.

“This will definitely have an impact on military readiness,” deLeon said. “We can’t be distracted (by this attempt to bailout the nation’s financial markets) from other national security issues such as energy independence.”

deLeon said it was the purchase of oil from Russia that “brought hard currency into that country and emboldened them to take the actions they have recently taken (in invading Georgia).”