I am 100% against the original rescue plan set forth by President Bush. Moreover, I like each new proposed wrinkle to the plan even less than the original. Is listening to Republicans discuss the U.S. government buying shares of private companies and characterizing that as a good and necessary thing a sign of the apocolypse?

Unfortunately, we are being held hostage. I mean that both as conservatives and as Americans. If we do not take corrective action, credit will completely dry up and the economy will go into a death spiral in a way that it hasn’t since the great depression. Think 5% unemployment is too high, well it won’t be less than 15% if small businesses can’t get loans.

Principled conservatices are basically being threatened with the following choice: (1) embrace unprecedented government intrusion in the economy such that it will take decades to roll back on a bite, scratch, and brawl basis; or (2) destroy the country as we know it.

Of course some of us think (1) also destroys the country as we know it, but that is for another day.

I have identified a modificed version of the White House/Treasury/Fed plan that make sense to me, costs virtually nothing, and involves no steps not currently planned for (i.e. my plan is a subset of the government plan).

The Sobieski Plan:

STEP 1: Set up a committee of people whose job it will be to determine the proper value of the distressed mortgage-based securities that are causing the crises. Everybody arguing about the rescue plan pretty much agrees on this, they just disagree on exactly who sits on the committee and what type of oversight there will be. Given step 2, I don’t think there will be as much fuss about Step 1 and I suspect it will be easy to reach agreement on the “valuation board” of my proposal.

STEP 2: Instead of having the government purchase the distressed security at a fair value price determined by the “Valuation Committee” which is what Bush/Paulson/Bernacke/et al want, we instead allow the current owner of the security to assign that same value to the asset. In other words, we allow the owner to adjust their balance sheet in accordance with the “fair value” as determined by the committee that would otherwise be chartered with spending the $700B… only the committee won’t be entitled to spend the money.

STEP 3: Celebrate the $700B in cost savings

STEP 4: If necessary, the Valuation Committee could continue to meet, providing updated “fair value” determinations as the various bonds age, updating the values accordingly. This can be done until the crisis is past.

If you think about it, its hard to argue against this plan. the core approach of the rescue plan is to help clean up the balance sheets of these beaten down bond holders so that the can loan money again.

In terms of impact to their various balance sheets, the impact of the Bush plan is the same as the impact of the Sobieski plan. My plan just happens to be $700B less expensive.