I really liked this article I found today on MSN Money written by John Markman entitled, ‘Can the Bailout Work? Fat Chance.’

I liked this article so much because, not only does Markman explain in layman’s terms how the credit/bank crunch occurred in the first place, but he also describes in layman’s terms the government’s proposed fix with the bailout.

Now plenty of people have been speaking and writing about this. The press has been having an absolute party, almost having created this “global financial crisis” on their own. (well not quite but at least perpetuating it).  Everyone is saying that the bailout was a necessary evil and 80% of those are saying it will ultimately fail. But what is missing from all this clamoring about the bailout? Exactly what I found in Markman’s article: proposed alternative actions to the government’s bailout of these banking institutions.

Markham describes one particular solution proposed by Brian Reynolds of WJB Capital in New York that he calls “Fannie Mae in every IRA.” Who is this guy anyway? Don’t know but he is right on with his proposed alternative to the bailout.

“Reynolds thinks that the Treasury should offer $500 billion in rebates to U.S. citizens. But instead of paying with a check, it should deliver new zero-coupon Fannie Mae bonds. (A zero-coupon bond is one that accrues interest for some specified period, such as 15 years, and then is paid all at once later on). If people wanted to spend the money right away, they could sell the bonds for whatever they could get for them in the marketplace, which wouldn’t be much. If they wanted more money, they could hang on to the bonds, and the government would pay the full face value at maturity. Nice and simple.

The genius of this plan is that it would deliver the money straight to the people instead of to Wall Street — a sure vote-getter. “We’d still be borrowing from our children, but we’d be borrowing less,” Reynolds says. Fannie Mae, whose debts are now explicitly guaranteed by the government, could use the money it raised to buy banks’ bad assets or provide capital directly. By this plan, citizens would become banks’ creditors, not their owners, so you wouldn’t have that acrid whiff of socialism.”

I like how Markham added that last bit in about the “whiff of socialism.”

There are a lot of proposed solutions/alternatives being thrown out there by the analysts and “experts.”  How about you?

Seen any solutions lately out there in the press that strike your fancy? Share please!

Source: http://articles.moneycentral.msn.com/Investing/SuperModels/can-the-bailout-work-fat-chance.aspx