I think it's pretty clear that something has to be done to stabilize housing prices as a fundamental part of fixing our economic woes. That and fixing our banking system so that credit again becomes available to both businesses and consumers. That seems pretty fundamental to stopping the freefall of our economy and maybe turning it towards a recovery. The housing price problem seems inextricably tied to the fact that a large number of people are "under water" on their mortgages, have already been foreclosed out of their houses, or are in foreclosure proceedings. The banks are holding even more mortgages that are called "toxic", as well as hundreds of billions of dollars worth of financial derivatives based on those toxic mortgage assets.

To me the mortgage bailout part of the stimulus announced earlier this week sounds kind of Rube Goldberg-like and unfair to those who never got themselves into mortgage trouble. It doesn't seem anywhere near big enough to address the mortage problem. Clearly, those who don't have a mortgage problem are going to pay to bail out those that weren't as responsible. About the only justification seems to be that a foreclosure in your neighborhood might cost you more than the bailout plan. That's tough to swallow. It would be easy to be critical of the plan for those reasons alone.

But a wide variety of financial experts -- conservative as well as liberal, Republican as well as Democrat -- are saying that it's a pretty well-crafted plan, better than anything else that was considered.

Trying to be unemotional about the plan, and with the predisposition to give the new administration the benefit of the doubt in their efforts to correct our awful financial problems, I'll try to read more about why the experts think it's the best possible approach. Maybe I can be convinced.

Clearly, no one really knows whether any of the TARP, stimulus, or nationalizing of businesses is going to work. But doing nothing and letting the free market attempt to resolve the problem clearly won't work. The crisis would deepen, with hundreds if not thousands of failed banks, whole industries such as auto, insurance and home loans disappearing and having to be re-invented. Residential and commercial construction and development would be a shadow of what it was. The resultant unemployment would be 1929-like, for sure. It might take a decade or more for recovery to happen, as it did in the 1930's. But then WWII helped the economic recovery, something we definitely can't rely on. And in the end, he government would own a lot of the assets anyway. The FDIC would own most of the assets of failed banks, including all the toxic assets and real estate-owned, same with Fannie and Freddie. The government would wind up obligated to pay the pension obligations of failed companies and we'd be left without major industries. The unemployment and Medicaid benefits alone would bankrupt many states. The costs of all that would be greater than even the big numbers of the "economic stimulus". It seems logical to spend the money now to try to avoid spending more in the future.

President Obama knows that if the plans his administration have designed don't work, he'll likely be a one-term President. He's said as much. Believing that doing nothing isn't really an option, I'm left willing to give the new administration a chance and hope for the best. Certainly there are many highly vocal critics of these plans, but they consistently seem to be better at crafting their criticisms of these plans than they are in actually proposing logical and complete alternatives. It's easy to forget that these people make a handsome living by being critics, with no responsibility for coming up with better ideas.

So far, I haven't come up with any plans that I like better than those offered by the new administration. I may in the future -- but not yet.