Well before the inevitable mix of soaring rhetoric and sober caution of President-elect Barack Obama s inaugural address, he d already grappled with the hard work of getting the economy back on track. The way I see it, the first job of my administration is to put people back to work, Obama said in a Friday afternoon speech about a possible $825 billion stimulus plan he hopes to pass shortly after he takes office Tuesday.

Our market and government watchers were quick to say the 44th president grasps the scope of our economic crisis, but not all believe the government initiatives now in the works will point us towards a recovery.

Events have moved quickly in the run-up to Obama being sworn in, including the release of the second $350 billion of the $700 billion Troubled Assets Relief Program (TARP) rescue funds. ISI Group policy analysts Tom Gallagher and Andy Laperriere on Wednesday gave Obama credit for a lot of heavy political lifting, but fear the package won t be enough, and it seems increasingly likely that more than $700 billion will be needed.

Ed Yardeni, of Yardeni Research, wrote the same day the new administration will keep wasting its time and taxpayers money on shoring up banks that won t lend to ease the credit crisis. TARP was a dumb plan as originally conceived that morphed into a really stupid one, he wrote. The best way to eliminate troubled assets from troubled financial institutions is to refinance them all at lower interest rates.

Since bad times can lead to bad policies, Sean West and Dan Alamariu, U.S. analysts at the Eurasia Group, fear that even well-intentioned politicians will be in over their heads.

Congress will have to decide on very technical issues such as mark-to-market accounting rules, prudential banking regulation, and bankruptcy laws that will have a direct impact on markets, they wrote Jan. 6. The debate will inevitably be politicized (as is already the case with regard to mark-to-market rules), raising the possibility of clumsy and burdensome legislation.

Protectionism and resistance to consolidation, both of which impair the workings of markets, are already in evidence and could do longer-term damage to the economy. Bank of America Merrill Lynch economist Richard Bernstein feared more populist legislative tinkering in a Jan. 13 note that recommended underweighting the already volatile financial-services sector.

Suppose a U.S. bank that accepted government funds begins to increase its lending, but that lending is outside the U.S., he wrote. It is our guess that the incoming Congress might have a problem with U.S. taxpayer money being lent outside the U.S. when lending in the U.S. has not picked up by an equal amount.

Legislative tussling aside, an energized president, taking power in the midst of a crisis surpassed only by the Great Depression, will likely make bold moves that hearken back to those dark times, Gallagher and Laperriere wrote Thursday. Obama may be channeling FDR next week. Recall that in his first days FDR closed the banks, proposed deposit insurance and devalued the dollar. Stocks after FDR s first 100 days were up over 80%, they wrote.

The most dramatic development would be the creation of a governmental bad bank that would take on weakened assets and strengthen the overall financial sector, a maneuver they said could be spearheaded by the Federal Deposit Insurance Corporation.

If there is a political constraint on higher [government] borrowing, then the best way to sell that is to propose something bold and present the borrowing as what is needed to deliver it, they wrote.

And yes, Obama just might do that.