The senate must think we're not that bright

As you may have heard, the senate just passed the "bailout plan". It's on to the house and I hope reps. get their ears pasted back by their constituents prior to a vote, and toss this thing down the nearest sewer.

Like a parent trying to get a fearful child to take some bitter tasting medicine, the senate "sweetened" the deal:

• An increase from $100k to $250k in the value of deposit accounts insured by the FDIC
• Tax cuts

Does the senate really think "We the People" are that stupid? The net affect of the above two changes is to increase federal liabilities and reduce funding for these liabilities. Huh?

Mark my words: the bailout is BAD BAD BAD!!! Without a doubt, some banks will (and should fail) because of toxic investments in their portfolios. Bad choices will and must have consequences in a free market economy.

One problem with the bailout plan is that it essentially gives the Treasury Secretary the power to choose which banks get to fail and which get to live on. He gets to choose which of an array of toxic investments he buys on the taxpayers dime. Not all banks are in bad shape, and most will survive after this is all over, bailout or no bailout. But placing the power over "life and death" in the hands of one man who now gets to choose which banks die and which survive worries me immensely. As ex-CEO of Goldman Sachs, I'm sure Mr. Paulson has the unbiased experience and will do the right thing. Uh huh!

The other essential problem with the bailout plan is that it delays the inevitable and thus delays recovery. These toxic investments move from private hands (banks) into public hands (taxpayers ... er ... federal government). In private hands, these investments would be written down, mortgages would be foreclosed and remaining funds recovered. In public hands, (there's no incentive for the Treasury to even buy them at market value) these investments will not be flushed because which politician has the needed courage to start foreclosing on "over their heads" home owners (interesting perversion of the word, no, when these owners own zero equity in the homes they currently occupy?) and recover remaining funds. No, the investments will be kept in the hopes that their value will rise. Right! The housing bubble has burst, folks, and these toxic securities will never regain the value they had when the banks that securitized mortgages believed in infinite bubble expansion.

Some experts are chastising us lumpen proletariat as lacking in understanding of how the financial system works. They're saying we should stop calling this a bailout plan and call it a credit flow rescue plan. Excuse me, but a plan that bails out, er ... rescues, some banks at the expense of others, at the discretion of the Treasury Secretary can't be impartially called anything but a "buddy bailout" plan. A plan that bails out, er ... rescues, some banks while leaving the taxpayer holding a bunch of "underwater" investments that will never regain their value is a "buddy bailout" plan.

Let the recovery begin now! Vote this sucker down. The result will be the same, it will just take longer if this thing is allowed to pass.