Move away from the disaster please...we need to rescue

In NYT's (Sunday 11-16-08) editorial piece the failings of Henry Paulson are being considered:

The one approach Mr. Paulson stubbornly refuses to consider is using bailout money to help homeowners avoid foreclosure. His reasoning — that the money is to be used to stabilize the financial system — inexplicably ignores the fact that the instability he is seeking to quell is rooted in the housing bust.
Over the next two months, Mr. Paulson must impose some coherence and clarity on the bailout. Otherwise he will only fan anxieties and mistrust, which will undermine the effectiveness of his good decisions and amplify the fallout of his bad ones.

Honestly, I am not aware of any "good" Paulson decisions. I think his actions leading up to and in the wake of this financial crisis are at best incompetent, certainly unethical, and at worst criminal...This guy needs to be cuffed and hauled away.

I am far from a financial expert. In fact, lately I feel like a financial idiot...to have not acknowledged some of this catastrophe looming...

Regardless I have two primary instincts that I cannot seem to shake.

First : Unless the strategy in this fiasco changes direction to provide "bail outs" for the consumer, I think we should change how we refer to this financial disaster. "Bail Out" and everything associated with it makes me angry. It makes me want to vent, throw up my hands in frustration. At a time when we need to come together to find solutions, "bail out" makes me want to fold my arms, plant my feet and blame. It makes me feel powerless to right the wrong and most importantly it makes me wonder if I will ever be solvent enough to retire. Worse, bail out means that there are no consequences for being wrong and acting irresponsibly perhaps illegally. And that leaves me utterly confused.

My suggestion, then is that we refer to this "Bail Out" as FMRP - Financial Market Recovery Program. Once we rename it, I suggest we re-do it. Scrap what we have - completely. Freeze the funds we "gave" to the banks, and start over...quickly.

Second: No taxpayer money should be distributed without lawful regulation, attached to it. And while we are using some of the funds to right the wrong, we should also deploy funds to reward the credit worthy consumer, whom under the current system, is being penalized by having to pay for the correction, while overly leveraged banks, mismanaged businesses and chronically in default consumers are getting all of the relief. Not only is this unfair, it is stupid.

How do we expect to heal the wound if all we do is cover it with dirt?

Foreclosures should be frozen. Home values should be adjusted to current or median market values. Those facing foreclosure should be moved into some kind of "rent to own" scenario, which would allow them to stay in their homes, adjust the home value and pay rent without default over a period of time, say 5 years - in order to gain back "ownership" of their home. Jobs should be created - lots of them. Funds should be funnelled into new businesses that support critical self sufficiency goals in America, i.e. alternative energy sources. Failing businesses should file bankruptcy, re-define their business model and begin again. Employees forced out of their jobs should receive aggressive assistance, retrained and re-employed in energy and/or infrastructure jobs. Credit worthy consumers should be identified and offered tiered interest rate decreases, as an incentive to stay current on debt over time. A national fixed interest rate on all mortgages should be instituted - I suggest 4%.

Critical to recovery, the government needs to spend to stimulate the economy. The growing national deficit should not hinder government stimulus levels. We must spend aggressively to bring about market correction.

Finally, whatever we do to fix this mess, it better make the citizens of America "feel" confident, empowered and positive. It is unproductive, even dangerous to have 78% of the population feeling angry and poor. Americans have resolve and drive. As our government, you'd better stand with us and walk beside us, because if we feel you are stealing from us, limiting our opportunity, and curtailing our freedom - you sure as heck don't want us coming up on you, from behind ...