HONG KONG, China – “A non-perfect plan is better than no plan at all.” So said International Monetary Fund chief Dominique Strauss-Khan in a recent interview. He was talking about the amended and reworked bailout plan going before the U.S. Senate.

But even if the plan is perfection itself, and the credit markets start trusting and loving each other again, we are not out of the woods. Not by a long shot. We then come to the next depressing piece of news: the real economy.

Take a look at this number. It was lost in the hullaballoo of the Dow’s rise and bailout hopes yesterday. U.S. house prices in July were 16.3 percent lower than they were in July of last year. And house prices are also falling faster. The much-watched Case-Shiller home index, released by Standard and Poor’s, reported the price of a home in the 20-city nationwide index fell 0.9 percent in July, compared with an 0.5 percent fall in June.

Overall prices are are now about 20 percent down from their peak in July 2006. And the really bad news is that many economists now say the fall may not stop until mid-2010.

That could be as much as another 20 months of falling home values, assuming the financial crisis is solved sooner rather than later. And that’s the problem. The millions of U.S. homeowners were the backbone of the consumer spending boom that led U.S. economic growth. They’re now AWOL. They aren’t spending because not only is the value of their biggest asset disappearing before their eyes, they are also worrying increasingly about their jobs and their mortgage rate. Who’s going to buy a new car with that in the back of their mind?

And there’s no one else to pick up the spending mantle. We’ve seen the government attempt to kick-start the economy with a tax rebate a little earlier this year. That boost lasted all of a few weeks.

So bring on the bailout. It’s just the start of a long and painful road to get the world’s biggest economy back on track.

HONG KONG, China — You know what? At the risk of sounding like true believer, I think the credit crisis may actually be coming to an end.

The wild fluctuations on Wall Street left many traders scratching their heads this past week.

Most people are saying it’s far too early to call but look at it this way.

The credit crunch, as distinct from the U.S. economic slowdown, is happening largely because banks have been too scared to do their jobs … lend to other each other. If they aren’t doing that the flow of money circulating around the financial world is being cut off. We saw that happening this week.

The banks are afraid that the other party they are lending to may be riddled with the so-called “toxic holding,” and be about to go under.

So what’s the likely solution?  Take away all that toxic stuff. Actually buy it from the banks. After that, the banks can get back to basics, safe in the knowledge that they aren’t doing business with an institution stuffed full of the ticking time bombs of property-backed financial instruments. No wonder stocks of investment banks around the world are having record one-day rises.

So … who’s the loser? Well, I’m glad I’m not a U.S. taxpayer. The estimates of exactly how much toxic stuff there is vary from tens of billions to hundreds of billions, even trillions. All of which will be bought by the U.S. government (i.e., U.S. the taxpayer).

They’ve done it before. In the 1980s the U.S. government bailed out the savings and loans companies who had hopelessly — and in some cases fraudulently — mismanaged their operations. That cost the U.S. taxpayer about $120 billion. That’s nothing compared with what this one could be. Did the US government have a choice? Unfortunately, we will never know. They clearly thought they did not.

And that leaves the banks getting a giant get-out-of-jail card, and the poor U.S. taxpayer cleaning up the mess. Again.