Maybe things had to get this bad before they could get better.

A 500-point plunge in the Dow Jones Industrial Average and the collapse of a major brokerage firm shook both Wall Street and Main Street to the very core Monday. It's not the way you want to start your week or, for those of advanced age, your retirement.

But these events were an unavoidable consequence of irrational decisions made over the past decade by everyone from the families that took on mortgages they couldn't afford to corporate chieftains who invested in securities they didn't understand.

Finally, Treasury Secretary Henry Paulson decided enough is enough. And when Lehman Brothers came looking for a hand from the federal government to bail it out of a raft of bad decisions made over the past decade, Paulson just said no.

It wasn't easy, and the pain will be felt by everyone from the thousands of Lehman Brothers employees to the millions with a stake in the stock market. But there was a limit to what even the federal government, with its license to print money, could or should do to bail out Wall Street this time.

Already taxpayers are on the hook for up to $200 billion for the federal takeover of Fannie Mae and Freddie Mac, the two titans of the mortgage market.

There are two basic questions that the presidential candidates, members of Congress and federal officials who will sort out this mess must consider: The first is to what degree government should regulate the housing and stock markets. The second is whether it is possible, or even desirable, to have capitalism without risk.

One of the virtues of capitalism is that it delivers painful lessons for misunderstanding markets. If government takes away the pain, there is no lesson learned and housing crises and expensive taxpayer bailouts are sure to happen again.