This one is really absurd.

Bill Gross of the investment firm PIMCO is calling for President Bush to "Write some checks, bail 'em out", referring of course to the millions of consumers who got suckered into adjustable rate mortgages (ARM). Gross went on to say that the Federal Reserve lowering rates "would not necessarily guarantee that adjustable-rate mortgages would not keep climbing or that mortgage lenders would relax their lending standards".

As I said yesterday, if the fed did lower the fed funds rate, a 1% cut would do very little to bailout adjustable rate mortgage holders. I think the fed is smart enough to realize this, and any cut on September 18th would be a symbolic move, and not a cure.

"Consumers holding adjustable rate mortgages with a teaser rate of 3% are going to see those rates re-set at around 8%. If the fed lowers the discount rate 1%, holders of ARM's will see a reset of 7% on their mortgages. A 1% rate cut is hardly enough to bring us back to the heyday of wild consumer spending".

In the real world, the Fed's lowering of the discount rate to 5.75% should help to alleviate the liquidity problems facing lenders. A cut in the funds rate would allow banks to lower their prime lending rates which are currently around 8%. But like I said a few minutes ago, a 1% cut would lower many prime rates to 7%.

For consumers who agreed to adjustable rate mortgages with an initial rate of 3% would still be charged 7%.

Let me see if I'm getting this right. The fed funds rate is currently 5.25%, so banks and lenders charge a prime rate of 8-8.25%. This means that consumers are being charged a rate that is 52.3%-57.1% higher than what lenders are borrowing money for.

Mr. Potter, the heartless and cold, banker and slumlord from "It's a Wonderful Life".

In civilized countries this is called loan sharking! If you or I were to lend money to a local business, and charged the 3% over the going rate, we would be thrown in jail for loan sharking. This is a fact, go look it up for yourself.

But banks, credit card companies, and title loan companies don't have to play by the same rules. Why? Because lobbyists for corporate America have many of our lawmakers in their pockets.

Here is an easy fix. If you really wanted to bailout homeowners, wouldn't it make more sense to require lenders to charge no more than 1% (or 19%) over the fed funds rate instead of 3%? I think this makes the most sense.

But, let’s be real. It will never happen. The dark side of capitalism is often the screwing of the other guy to get ahead. In corporate America, how much is enough is always answered by, it’s never enough.

I have to tell you that I am a full blown capitalist. But I believe that capitalism must be tempered by decency and morals. For example, I don't see healthcare as a business, I see it as the right thing to do for people who are sick.

Corporate America sees healthcare as a business.

For example;

According to the Center for Responsive Politics, there are four times as many health care lobbyists as there are members of Congress.

There are almost 50 million Americans without health insurance. While people are dying, or losing their entire savings to paying medical bills, people like;

Bill McGuire, CEO of United Health had stock options worth $1.6 billion at the end of 2005. According to the "Forbes 2006 Executive Pay list" (April 20, 2006), Michael B McAllister the CEO of Humana, earned $3.33 million

Will this BS ever end?

A World Health Organization report in 2000 said ""The U. S. health system spends a higher portion of its gross domestic product than any other country but ranks 37 out of 191 countries according to its performance."

So, will President Bush "Write some checks, bail 'em out" as Bill Gross of PIMCO thinks he should? Not if we follow the same philosophy that we have in Banking and Healthcare today.

The "screw'em, and let'em suffer philosophy really rubs me the wrong way.