i would give 1.4 trillion to the american people so they can spend it on product made in china and collect the taxes, i would buy mexico to get cheap cheap labor and i would buy canada to get clean water and to get cheap syndicalise labor.

First, I would do a bail out with provisions. First, they have to renegotiate the mortgages. We also have to increase regulation. But, we need the bailout to restore credit to the market. there will be no market correction if there is not enough credit to go around. Busniess will fail, jobs will be lost, consumer spending will go down. It will be a long time before things are fixed. Its much more than just bailing out wall street. The question is: If you are chained to someone you hate and are standing on a cliff, do you work with him to get out of the mess or do you push him off and go down with him?

Second, I would promote investing in newer technology through tax breaks and incentives. this includes new energy sources, computer technology, medical technology and environmental research. Also, increase spending for NASA. These jobs will have major benifits and will not be empty investment like the housing market will be.

Third, I would cut taxes on small business. I would lower the tax rate and employer tax, allow for some more deductables, and have a MAJOR tax break for first and second year operations.

Fouth, we have to invest in education. Not only for children, but parents as well. Investing in schools does not help if parents don't help out. So, we need to educate them. Also, make the school system better, pay teachers more, invest in more science and math based education.

Fifth, we need to cut spending. Earmarks is one way, Don't get rid of them, but be more critical. Another way is to get rid or severely cut bad social welfare programs. Cut and limit welfare is one way. There are alot more things that could be cut in this catagory.

I think that would help in the long run. IMO defense spending is needed, we need to contiuously upgrade, especially since the world is going in a more confrontational direction. We need to get out of iraq and focus more on afghanastan, and keep a very close eye on chavez, russia, and the rest of the middle east.

1. Freeze all mortgage rate hikes.

Most people are foreclosing due to the 2yr spot when their interest rates adjust up for the first time. This puts the mortgage payment above their means to pay the bills due to their idiocy of not planning correctly for the future changes. By stopping that increase temporarily until the market has stabilized and house values begin to increase you allow more home owners to remain and banks to get stuck with far less bad debts. Then once the house market begins to increase at a normal rate the people now have equity and an opportunity to apply for new loans at better rates or at least better payment terms that they can afford and keep their homes.

2. Do not 'bail out' the banks.

The principle of capitalism is that bad choices will cause you to fall and/or be purchased by those who were smarter. The market will fix itself over time. Just like the .com bubble before, the companies who are failing will either be bought by the government or some other bank at a price that is really low and will make all of those bad debts into great investments for the buyer.

Example. I have a $250,000 home. It is now worth $200,000. I foreclose on my home and the bank is stuck with a possible $50,000 to $75,000 loss on my home IF they can resell it. They get enough of these and must now sell to a larger company. That company effectively buys my loan for $180,000 when it buys the company. It now has $20,000 in potential profit by selling the home at or near its current value.

I would think these two combined would be the best options.

I'm getting really tired about hearing how great everything was under Clinton. His first few years were rough, then deregulation began... Which has caused some of the mess we're in now. Then the tech boom happened and Wall Street blew up.

I'm not bashing Clinton, I think he was a decent president but he gets way too much credit for being in the right place at the right time while the fiscal Republicans were controlling the House.

The key problem that is leading to the liquidity crisis is that far too many mortgages are entering foreclosure, and (at this point) the main reason for this is that the market value of the home is far less than the value of the mortgage. In my opinion, if you're going to go down the path of spending an insane ammount of money to fix a problem, you should focus on the core problem and not one of the symptoms; if you don't address this problem all the money you spend today will only be a temporary fix.

In my opinion, the stupid and expensive way to address this problem would be for the government and banks to get together and each pay off 33% of the portion of the mortgage that is above the value of the home. Many individuals who currently owe $30,000 to $60,000 more on their mortgage more than their home is worth would be far more likely to keep paying their mortgage if this was reduced to $10,000 to $20,000 being that it is far more likely that the home will regain enough value over the next few years to have positive equity.

I could be wrong, but I suspect that this approach would be far less expensive than the $700,000,000,000 bail out that is currently planned being that not all houses have negative equity, and most of those that have negative equity probably have less than $30,000. The other benefit of this approach is that both the banks who gave out the mortgages, and the (foolish) homeowner are not let off the hook for their mistakes.

debtors prison = sounds good on paper, but how much does it cost to support someone *IN* prision? I'd rather just take a chunk off the top of their paycheck, kind of like Child Support for Deadbeat dads.

We could have "foreclosure support" for deadbeat debtors. They could still support themselves and work and have a job still; but they won't have to be in debtor jail ^_^

@ Superchunk, i agree that we shouldn't bail out stupid companies, but at the same time I don't want to see one giant bank buy out all the other banks and have it be the Microsoft of banks. Ideally, I'd support the private sale of the strugging companies to a foreign company or someone who is not part of the JP Chase Morgan Stanley bank monopoly. That would be ideal, as that would limit the amount of government involvement.

well then again, floating a bond would reduce the available money supply by 700 billion dollars.

that opens up the possibility of decreased investment in the private sector, in turn lowering wages and jobs, which also in turn makes it harder for people to pay off their debts.

you could sort of counteract that by decreasing the federal interest rate; but these things all have different time lags and could make the economy more volatile than it already is.

The best way I think is to have some private investors swoop in and bail out the companies so the government doesn't have to to jack. i'd just be wary of giant monopolies then.

I started thinking today, that one of the core reasons why the credit market has frozen up is because of the fear of buying bad mortgages that will lose money rather than these mortgages being so bad that they will lose money. Now, if you could eliminate the fear you could get the credit markets operating again and it is possible that the losses will be much smaller than people really expect.

I started thinking that if you promised ‘money’ to give the appearance of protection you might be able to solve this problem without spending much money at all. A solution I came up with that met these requirements was to create a short term Capital Loss-Haven where capital losses generated on credit-default-swaps were tax deductible at 1.5 times the value lost.

Nice thought, but the problem is they are bad loans. Most of them as subprime loans on an ARM (adjustable Rate Mortgage).   There are two major times you do an ARM. One is if you are trying to flip a house, and don’t expect to own it very long. The other time is when you can’t afford the house you want, and opt for the low payment now, gambling that the value will go up and you can then barrow the difference to compensate for the higher payment that will be coming up in the years to come.

The problem is there will be no money to borrow, as your house did not go up in value. This means while these houses are being paid for today, when there interest rates go up (and they will), they are screwed.

learn how to spell financial.