Artificial life forms evolve basic intelligence

Artificial life forms evolve basic intelligence.  As Glen Reynolds of Instapundit would say, "More BOLO, less Terminator"

Comparison between the (as yet) Fictional August Suprise! and Instugator's Rescue Plan

Hot Air is reporting that James Pethokoukis is hearing rumors that the Obama Administration is thinking about ordering Fannie Mae and Freddie Mac to bail out 1/5 mortgage owners who are "under water" (they owe more than their homes are worth). As a Fannie Mae Stockholder, I am in disagreement with this policy.  Since I am a strategist, I am in extreme disagreement with the policy; mostly because it does not make strategic sense - (even though I suggested a similar strategy, the beneficiaries of my strategy are those who did the right things.  Read more here.)

The Money Line form Hot Air, "In other words, it’s exactly the same kind of Obamanomics that we have seen for the last eighteen months — spend what we don’t have now, run up debt like crazy, and hope that a momentary spike will translate into political success.  Unfortunately, that has also been the formula for long-term economic failure."

Instugator's Rescue Plan is more thought out.  Here are the particulars:

Principles:

1. Reward those who practice good behavior

A. Paying your mortgage on time is good behavior

2. Do Not reward those who practice bad behavior

A. Borrowing what you cannot afford is bad behavior.

B. Having an interest-only mortgage is bad behavior.

C. Having an ARM is questionable.

D. Investment Bankers who purchase CDO’s without understanding the underlying value of them are engaging in bad behavior.

E. Those who sold CDO’s without including the data necessary to understand the underlying value are engaging in bad behavior.

3. Do not let those most directly responsible for the current mess come within 100 miles of the bailout money.

A. Those whose W-2 forms show that they work for congress, Freddie, Fannie, or any investment bank in need of a bailout need not apply.

The Plan:

1. Take the $700B <or any figure currently in Vogue>

2. Find those people who-

A. Have a conventional mortgage.

B. Have always paid it on time.

C. Have never declared bankruptcy

3. Establish an agreement that the Gov’t will:

A. Pay off the mortgage of those who meet each condition in item 2.

(This allows banks to resume mortgage lending and permits those who engaged in good behavior to go bargain-hunting - thus rewarding good behavior)

B. Each person whose mortgage is paid off will agree to make monthly payments to a money-market account

(This increases short term liquidity - also allows those with good behavior to use their work ethic to the betterment of all)

C. Each person agrees to re-finance their house at the end of a 5-10 year period of time at market value to repay the Gov’t.

(This repays the bonds that the govt will have to put on the market to fund the plan)

4. The government will issue bonds to pay for this plan (up front).

5. Bonds are repaid prior to maturity by those bailed out.

(People with good behavior are people who are less risky - that is why they have good credit ratings)

6. In the event the number of bailoutees exceeds the dollars available, applicants from the acceptable pool will be chosen by lottery.

Instugator, as author of the plan, recuses himself from participating.