Here, at first blush, is my solution: Publicly go along with Paulson's plan for now. Do everything possible to reassure the banks their money is safe.
Quietly create a new banking institution free of toxic debt. Avoid counterparty transactions with banks that hold ( held) such debt. Prohibit trading of derivatives of Mortgage Backed Securities.
Repeal the bailout in 2009. Shift bad debt off the government balance sheet back to the banks it came from and let the chips fall where they may. Banks will be ruined and fortunes lost. The stock market will crash.
Slowly write down the mortgage principal on the ruined banks' balance sheets. Apply mortgage payments to principal first, interest and fees last. Homeowners keep their homes and build equity quickly. Housing deflation is checked. The dollar is saved. Economic recovery follows.
Of course, I have not considered all the ramifications. But the bottom line is that the current bailout will bring about the ruin of the United States and does not keep people in their homes. As Commander in Chief, Barack Obama can not allow this to happen.
Daniel Bruno Sanz is a currencies trader and the author of "Why Obama Will Win in 2008 & 2012." FOR MORE INSIGHTS FROM THIS FELLOW'S BRILLIANT WEBSITE, CLICK HERE: www.WhytheDemocratswillwinin2008.com
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