Seeing how the democrats seem incapable of figuring out the boondoggle Bernake and Paulson are in the process of engineering I thought I might outline a modest proposal for a fair resolution to the present financial crisis.
Buy two trillion of toxic sub-prime at 40 cents on the dollar; disaggregate, repackage and re-sell back to existing home owner for 50 cents of the original face value. The taxpayer realizes a 25% ROI, and average Joe gets his house for half the price of its originally bloated asking price. That effectively puts a floor on valuations and ensures that those who took the risks suffer the losses.
Maybe the haircut could be a little less severe say 60 cents and resold at 70 cents for an ROI to the taxpayer of 16.66%. But whatever the discount the plan covers all the bases: it both socializes the risks and the profits.
The plan can be defended against all criticism by simply repeating the following phrase:
It might be costly but it is less costly than doing nothing.