Please Help Me - You Need To

So, while I am a roll.

With all of the financial mess going on, as the world's financial geniuses melt down, I am wondering what a good course of action might be for the Government to take now.

For those of you living on another planet, lets review quickly. In this last couple of years, someone discovered that the boom in house values was being fueled by sub prime mortgages.

What is a sub prime mortgage? Simple. It is a mortgage given to an individual with no verifiable income to purchase a property that twelve months ago was worth half its now appraised value. Mortgage Giver makes this "sound" investment by charging "Mr. I Have No Money Only Hope That No One Ever Asks Me To Pay This Dumb Mortgage Before I Can Dump This Stupid Property At A Profit" a high interest that is also not being paid but being "amortized" into the mortgage creating a larger mortgage that is not getting paid. Mortgage Giver doesn't care because he is only going to sell it to Mr. I Must Have High Interest Earning Investments to prove to my shareholders that I am worth my large fee. Now this all works because the bankers hire accountants who understand accrual accounting. Now we will not bore you with that definition, suffice to say it does not mean cash in the bank only promise to pay.

Well, the bubble bursts, as they always do. Banks don't stop collecting most of the mortgage money only a normal amount except of course in Florida, Nevada, California and Arizona but those nasty accountants now make them write down many of those mortgages to their real value. Look out ... tens of billions of paper losses. Watch out for the crash.

So, that is the background to my story. If your really interested, please write and I can really bore you with more details.

Now, this brings me to my latest idea.

The Government bailed out Bear Stearns after they were greedy and chased the gold of was only a dream.

Fannie and Freddie liked make believe high earnings, so they bet your money. In fact, they got banks to led them money as "subordinated debt" to make more silly mortgages while promising those banks a high return on paper. So the Government had to step in a bail out the Fannie and Freddie, and of course screw the little investors but save those sophisticated banks who made dumb investments in Fannie and Freddie subordinated debt. This bail out should only cost you, 100's of Billions or more but whose counting.

Detroit has for years made fuel inefficient cars. Detroit has not been watching while Japan , Korea, and Germany made reliable cars and many of them fuel efficient. Congress somehow actually decided that Detroit must meet a reasonable miles per gallon in ten years. Well, Detroit decided in this election year to ask the Government for $50 Billion dollars in low interest loans so they can make the kind of cars that Japan and Korea are already making.

AIG, an extremely large insurance company, made some very bad bets on sub prime mortgages and real estate and well everything. So, the answer, ask the Government for a $40 Billion loan to cover their mistakes.

We will not complain about the excessively large salaries the executives at these companies get to lead their companies into disaster, that is for another day.

I have decided that the Government should give me a long term loan interest rate for say ... $10 Billion. Peanuts, you say. I say very necessary. See, if my friends think I can not afford to take my family on a suitable vacation every six months, buy a new car every two years, expand my house, buy new furniture, send my children to exotic schools, well they will be worried about the economy. If they do not see me buying things and spending money, they will decide that I might know something and start to cut back. The ripple effect could be disastrous. For every dollar, I don't spend it could cost the economy thousands of dollars or more.

So, Mr. Government ... loaning me money is in the economy's best interest. If I have more to spend then the economy will grow and you, the Government will collect more taxes to cover more stupid mistakes by people who make a lot of money to make better decisions.

Or you could let us all suffer the results of our bad decisions. You decide.