Falling oil prices led to a small rally on Wall Street yesterday – the Dow was up 46 points. The gain capped a brutal quarter for the markets, which were down 7.8%.

On the "vast socialist enterprise" front, farmers are expected to plant less corn this year, according to the Department of Agriculture, and that could mean higher food prices. The burgeoning ethanol industry has driven corn prices way up, which has a cascading effect on other food prices such as poultry, beef, and pork -- animals that feed on corn. The high expense of growing corn and favorable prices for other crops, such as soybeans, is driving down the amount of corn planted.

Savvy investor Charles Morris has a new book out called “The Trillion Dollar Meltdown,” in which he predicts the amount of defaults and write downs during the bursting credit bubble will total a cool trillion dollars. “The sad truth,” he writes, “is that subprime is just the first big boulder in an avalanche of asset write downs that will rattle on through much of 2008.” He says to expect the landslide to cascade through high-yield bonds, commercial mortgages, leveraged loans, credit cards and -- the big unknown -- credit-default swaps. The notional value for those swaps, which are meant to insure bondholders against default, covered about $45 trillion in portfolios as of mid-2007, up from some $1 trillion in 2001.

Swiss bank UBS is doing its part to meet that dubious goal – it said this morning it’s expected to post a first-quarter net loss of 12 billion and would seek $15 billion in new capital. It also said it sees losses and write downs of approximately $19 billion on U.S. real estate and related credit positions.

Secretary Paulson’s blueprint for reform of financial regulations continues to receive a barrage of criticism from Capitol Hill Democrats, small banks, state officials, and others. Credit unions are concerned that a single depository regulator would force them into a structure dominated by traditional banks; smaller banks fear that creation of a single banking regulator will favor the desires of their bigger competitors; and state prosecutors complain that a proposal to create a national insurance regulator would substitute their vigilance with weak federal oversight. Paulson responded to the criticism by saying: "Those who want to quickly label the blueprint as advocating more or less regulation are oversimplifying this critical and inevitable debate. The blueprint is about structure and responsibilities, not the regulations each entity would write."

The Wall Street Journal has an editorial arguing that Secretary Paulson’s maneuvers are irrelevant to the real reformer that is already hard at work, changing the financial system right before our eyes.

"His name is Adam Smith, and his relentless market discipline is already building a safer, more conservative financial system without any new regulation at all. In short, the decade's great experiment in direct, unmediated lending is undergoing an Adam Smith cleansing … Structured-investment vehicles, dodgy asset-backed commercial paper, and the like have been moving onto bank balance sheets. Hedge funds are unwinding, or at least the riskier versions are. Derivative contracts are still being written, but more cautiously, and with more connection to the value of the underlying asset … [The Fed] … has the most to answer for in this entire episode. First, it drove a reckless monetary policy that created the subsidy for debt that fueled the housing and credit bubbles. Then it failed to call the banks under its supervision on the major risks they were taking. The Fed had every authority and tool it needed to scour Citigroup's balance sheet and question its lending practices, yet it failed to do so. And now, without a hint of irony, the Treasury and financial press declare that the solution is for the Fed to become a 'Supercop.' What do they think the Fed was supposed to become when it was created in 1913, after the Panic of 1907 -- a potted plant? Today's credit panic isn't some ‘crisis of capitalism’ that needs a vast new layer of regulation. We are living through the aftermath of a societal credit mania fueled by excessive money creation. The regulators are as much to blame as the regulated, and Adam Smith is providing more punishment and reform than Washington ever will."