5 Alternatives to Government Bailout Plan

Tunnel vision is only helpful when you are sitting in the chair at the eye doctor's office. (By the way, what do you call an eye-doctor? Is it optician, optometrist, or ophthalmologist?)

Back on subject. The eye doctor or her assistant instructs you to "Rest your chin here, close your left eye and look straight through there."

That single focus can help get you the right prescription lenses, if you need them, but this kind of one-way view can be very limiting and costly in the real world. And the high cost of tunnel vision is magnified a billion times over when we are speaking of something as massive as the trillions-of-dollars mortgage sector of the American economy. Yet until now, a tunnel-vision approach is exactly what the treasury department and the Bush administration has been trying to foist upon the American public. "Give us $700 billion, or we're all going to hell in a hand basket!"

But is there really no other way out of this sticky, scary mess?

According to National Public Radio, between economists and politicians who know what they are talking about, a back-door infusion of money into these failing banks and investment firms need not be our only option. We've got choices to consider.

Alternative #1: Instead of sneaking the money through the back door, the government can come boldly through the front door and buy shares directly into the mortgage banks and investment companies. This idea is being floated by Mr. Simon Johnson, former chief economist at the IMF, and currently professor at MIT. Mr. Johnson also recommends...

Alternative #2: The government should lend money to the companies and use the distressed securities (the mortgages) as collaterals for the loan. That way, the government is not buying the bad mortgages directly. Treasury Secretary Paulson criticizes this option as "The Japanese Plan", which resulted in Japan's prolonged recession.

Alternative #3: Force the investment banks to stop paying dividends. If they stop making investment interest payments to their investors, they can build up capital (piles of cash).

Alternative #4: For the the investment companies at risk, the government can suspend capital gains taxes. Give those companies a break, a grace period, when they do not pay taxes on the profit they make on the troubled investments and their other assets. Yes, the government will lose those tax dollars, but won't that be much less than the $700 billion bailout price tag?

Alternative #5: Instead of giving the money to the companies, provide funds to help the millions of homeowners facing foreclosures, due to the scammy NINJA loans. That way, the mortgagees will be able to make their payments. After all, it is these pending foreclosures that have wiped out the value of the mortgage-backed assets.

Though the administration still has its sight set on the expensive bailout, it's encouraging to see that some alternatives are now part of the debate and discussion. Though each alternative has its own set of pros and cons, each should be looked at to see if even a combination of some or all elements from the various alternatives can be used to solve this complex problem, so that the final solution is fair to taxpayers, while making the culprits carry some of the load for turning this thing around.