This financial bailout is much, much worse then any of us have been led to believe.

(The above image comes courtesy of the folks at Voltage Blog.)

The government's financial bailout will be the most expensive single expenditure in American history, potentially costing around $7.5 trillion -- or half the value of all the goods and services produced in the United States last year.

In comparison, the total U.S. cost of World War II adjusted for inflation was $3.6 trillion. The bailout will cost more than the total combined costs in today's dollars of the Marshall Plan, the Louisiana Purchase, the Korean War, the Vietnam War and the entire historical budget of NASA, including the moon landing, according to data compiled by Bianco Research.

It remains to be seen whether the government's multipronged approach to bail out banks, stimulate spending and buy up mortgages will revive the economy, but as the tab continues to grow so does concern over where the government will find the money.

Monday the government guaranteed an additional $306 billion to bail out Citigroup, and today Treasury Secretary Henry Paulson pledged $800 billion to make credit more available to consumers and small businesses, and to buy up mortgages from Fannie Mae and Freddie Mac.

Look I am not an economist, but you don't have to be a genius to realize that none of this makes any damn sense!

The money is not going to the places it needs to go to solve the problem.  Handing fistfuls of money to the financial institutions that caused this problem in the first place means excusing the stupid behavior of those who should have known better and leaving the Americans who trusted them holding the bag.

That is absolutely criminal.

I am not completely sure we should do anything at all, but if we absolutely believe that something must be done, then the people who should be rescued are the people who really need the loan.  Us.

Help those who have mortgages they can no longer afford renegotiate those mortgages.  Make the banks eat some of the cost and provide a better payment plan for the homeowner so that they don't just leave the key under the mat and walk away.

Here are some ideas that just might work:

Every primary homeowner should be automatically refinanced to a floating 30-year mortgage, with the interest rate set at 1/4 percent point above the fed funds borrowing rate. Similarly, all consumer credit card debt should be refinanced to prime plus 1/4. The same goes for student loans. Secondary and vacation homes don't qualify. Unemployed homeowners can apply for hardship deferrals, allowing them to skip mortgage payments until they find a job.

 Banks that fail should be nationalized. As should investment banks and any other institution that needs federal taxpayer money to avoid failure. If we the people fund 'em, we the people own 'em. If and when the economy recovers, the Treasury collects the spoils and cuts our taxes. 

Withdraw from Iraq and Afghanistan, and slash defense spending. Christopher Whalen, managing director of Institutional Risk Analytics, tells USA Today the government may have to cover $1.4 trillion in bad mortgage debt. That's a lot of money, but I have good news: we can get it. In 2007, the Congressional Budget Office estimated that the occupations of Afghanistan and Iraq would cost at least $2.4 trillion through the next decade--even more if Obama or McCain keep their pledges to send more troops to Afghanistan next year. Cutting our losses and cutting the $515 billion a year Defense Department appropriations budget would help finance the clean-up of the mortgage meltdown. (These suggestions are care of  Ted Rall, who is much more informed on economic issues then am I.)

Now I know this could be interpreted as simply donning my tinfoil hat again, but does anybody else feel that George Bush is trying to sabotage the economy and the war effort in an attempt to render the Obama Presidency impotent?