The Stakes are High.

I have been buried in financial opinion and analysis and of course the opinions vary widely. I am not an economist and this is not a subject I enjoy looking into, but the stakes are high and we are being rushed to give a huge blank check and unaccountable power to the very people who's reckless tampering with the markets got us here. They have lost the benefit of a doubt in my eyes. It should not surprise anyone that when you dump huge amounts of easy credit into a limited market, the value of those dollars goes down, causing the price of those houses to go up in the inflated dollars. If you then dump yet more dollars into the market, backed by those inflated property values, you are building a bubble. If you or I ran such a ponzi scheme we would be prosecuted. Only our congress would see it as a reason to open our wallets to them when it collapsed.

We are being told that we "Must do something!", and I agree we should, as we have brought this about, but we should be careful that we don't make the problem worse or longer lasting by what we do. I do not think we should try to save the mortgages of people who should never have been given loans in the first place and I don't want to shift the costs from the bankers to the tax payers. If the government buys these loans it would seem they will be dumping them, further depressing a market already flooded with under priced homes. Also, with so much money moving around and so little transparency I absolutely do not trust these bozos not to skim off huge amounts for their favorite groups. Having taken over the housing market and the banking system, what industry is next? When the market tampering makes the problem worse rather than better, will they admit their error and undo it or will they say they need yet more control? I was trying to make a living in Nixon's wage and price controls and Carter's economy. No thanks! Not again! They will say what supporters of socialism always say, "It just wasn't done right" and "We need to go farther". Bull!

What to do?

Suspend or modify "mark-to-market" accounting for now. I don't know if it's for the best long term but it is causing problems in this situation. I think we need something similar long term.

Loosen up credit by lending to banks rather than buying bad assets. If banks have been imprudent them let them end up in other hands but don't let the lockup take down the healthy banks. Make it clear there will NOT be a buyout!

Ease concerns about mortgage backed securities by issuing insurance, which the holders will pay for, not the tax payers.

If people were hurt by recent purchases of homes at the inflated prices WE caused I wouldn't mind seeing a limited program to help share their loses, but strict oversight and control is needed. See the next point.

Put proper adults watching over these programs and dismantle them! Congress has shown it is not honest enough for this task. They can not have the power to interfere with the regulators. It should be obvious that the people charged with oversight CAN NOT TAKE MONEY from the people they are watching. Unfortunately this was not so obvious to our legislators.

Part of the problem here is that the economy was already staggering from high energy costs. We should immediately start developing and expanding the different energy and refining resources we have, not just removing the legal blocks but passing emergency enabling legislation that will keep the usual players from blocking these projects in court or in the regulatory agencies. The regulators need to do their jobs to protect us but these programs need to be exempted from the more onerous provisions that can be used to tie them up for years. The oil, coal, shale oil, and gas we have can supply the time and the prosperity we need to develop long term practical alternative energy sources. We need new refineries so we don't take a hit every time a storm blows through the gulf or something causes one to shut down for a while. We have not built a new refinery since the 1970s and we have no effective reserve capacity. Ending our oil imports alone could save more in a couple of years than the staggering amount they want to grab for the bailout. All that money pouring into our own economy would greatly help the recovery.

Given the hit our economy has taken from high energy prices and this market meddling we can not afford to hit it with higher taxes now. The tax cuts should be made permanent and expanded. Capitol gains tax should be greatly cut to encourage investment, and corporate taxes, which are among the highest in the world, should be reduced or eliminated. We have seen several times in my lifetime how powerful and robust our economy is when we let it operate properly. This would seem to be a good time!

This is my much oversimplified, under qualified opinion on this mess. The good news is that I am not part of the system making these decisions. The bad news is that we will all have to live with the consequences. This will not be fun.