$700 billion!! Did I hear that right?

Isn't the proposed Wall Street bail out the same ( I would argue worse) than the mismanaged FEMA funds. I would describe the situation/abuse in Louisiana after Katrina as follows: (1) the state of Louisiana (and, thus its taxpayers) failed to adequately prepare for an inevitable hurricane, (2) the hurricane came and destroyed New Orleans, etc..., (3) we (the federal taxpayer) bailed them out of the mess that their poor planning and frugality (an analog to greed) got them into, and (4) now they (the people responsible for the mess in the first place) are able to take unfair advantage of the bailout on our dime. I would argue that: (1) instead of making intelligent investment decisions, our financial institutions took advantage of under regulation and tried instead to make risky profits on securitized sub-prime loans (analog to Louisiana not building adequate levies) and (2) the inevitable devaluation of assets (analog to Katrina) occurred and wiped out a lot of the fake value created during the bubble. The stockholders (owners who chose to purchase an ownership stake in these risky companies) and the CEO's are losing a lot of money. The question now becomes: did we learn anything from the federal government's response to Katrina?" The Wall Street bailout plan called for the Fed to use $700 billion to buy "bad assets" from the very financial institutions that made the bad investments (and causes the bubble) to begin with. This plan rewards the very CEO's, investment bankers, and stockholders whose greed caused this mess to come about. Also, there a strong incentive for the fincancial institutions to cheat the system much like residents of Lousiana cheated the FEMA scheme (i.e., (1) American financial institutions may reorganize their corporate structure and reallocate their assets in such a way as to shield their valuable assets from liability while having the Fed (we the people) buy their bad assets or (2) foreign financial institutions may transfer "bad assets" into their U.S. subsidiaries for the Fed to purchase). The above argument is phrased in terms of the "justice" or "injustice" of the resulting wealth redistribution from the "innocent taxpayer" back to the "guilty stockholder/CEO/banker". However, the same logic also supports an argument that this bail out plan will stop the "invisible hand" of the "free market" from eliminating inefficient market participants (here, the "bad financial institutions/stockholders/CEO's" who made bad business decisions and would otherwise go bankrupt in a free market). Moreover, aside from justice or economic arguments, the plan simply won't work as advertised. The plan is infeasible and unlikely to succeed. My general understanding is that scheme involves giving the money ro the Fed to purchase "bad securities" from companies it determines to be essential to our financial wellbeing. This plan isn't feasible because it requires the Fed to have the prescience to pick "indispensable" financial institutions before their actual failure--to be able to identify the systemic effect of the failure before it occurs. The Fed has openly admitted that it doesn't know what will happen if certain institutions fail. For example, the Fed and commentators largely justified the AIG bailout by saying that no one knows what would happen if the world's largest insurer of credit default swaps was unable to make good on its policies. Also, in numerous hearings and interviews, representatives of the Fed have admitted that it is impossible to predict beforehand which failures could "irreparably damage" the economy. As such, the very premise of the plan (i.e., that the Fed knows how to distribute the bailout money in a way that will help the American economy "dollar for dollar" more than just giving that money back to taxpayers as a refund or lowering taxes by that amount) is irrational. According to Wikipedia, in 2007 there were 138 million taxpayers in the U.S (see http://en.wikipedia.org/wiki/Taxation_in_the_United_States#Tax_distribution). If we divide that number into the cost of the bailout "plan," we get a cost of $5072.46 per taxpayer. Please note: (1) Just for irony, I wanted to see how big of a 0% down, principle only, ballooning, sub-prime mortgage every taxpayer could have paid for with his $5072.46. So, I multiplied the 5072.46 by 360 (30 years X 12 months) and got $1,826,085.60 total principle. The bailout is roughly equivalent to the first month's sub-prime mortgage payment home costing $1,826,085.60. That payment is from every American who filed taxes last year whether they make $2,000,000 or $20,000 a year, whether they bought a $1,826,085.60 that was beyond their means during the bubble or not. A payment made directly to Wall Street for getting us into this mess. I guess we can look at it as a big, collective "thank you." Also, if we (the 138 million taxpayers) got together to purchase these $1,826,085.60 dream homes and combined our $5072.46 up front instead of giving the money to Uncle Sam, do you know how many homes we could buy? Answer: 383,333 (three hundred thirty three thousand three hundred and thirty three) $1.82 million dollar dream homes. I have a sneaking suspicion that 383,333 is likely more homes than currently exist in Jacksonville Florida--and the average price of a home in Jacksonville is (optimistically) somewhere around $200,000. We could build the residential sections of more than 8 Jacksonvilles with this money. (2) Also, I know a lot of people complain about "welfare" being a waste because a small percentage of recipients game the system and get "something for nothing." It's ironic to me that, far from doing nothing, the Wall Street firms actually (1) caused the crisis and (2) made money on it, yet, we desperately want to throw money at them. I did some research. In terms of cash payouts, the average welfare recipient in the United States receives roughly $300 a month (or $3600 a year). At the end of 2005, about 4.4 million people in the United States received welfare benefits (see http://www.mediatransparency.org/story.php?storyID=184). The total value of welfare benefits in the United States is $15.8 billion a year (4.4. million X $3600) This figure, of course, excludes overhead/administrative costs--but so does the bailout plan. The result if you do the math: the undeserved "bailout (welfare)" we are contemplating giving to Wall Street is equivalent to giving benefits to all current welfare recipients in the United States for over 44 years. I also note, if the $700 billion were earning interest of 4% a year ($28 billion in interest a year), the interest alone would pay for welfare for infinity with about $12 billion to spare per year. (3) Finally, last election, "social security reform" was a "hot button" issue because back then (2004) we were focused on the fact that we don't have enough money to continue the program (i.e., Congress has spent all of our savings and can't pay us back the money it deducts from our paycheck every week.). I vaguely remember W. saying something about "privatizing social security." Well, that didn't happen. But, it is interesting to note that the cost of his Wall Street bailout, this proposed plan of government intervention into private markets (isn't this the exact opposite of "privatizing"?), will cost us the rough equivalent of $3.5 trillion 2080 dollars (accrued at approx. 4% interest). Ironically, in 2004, when Bush was calling for privatization of social security (rather than Kerry's proposed government bailout of the program), the estimated social security deficit in 2080 was $3.7 trillion (see http://www.factcheck.org/does_social_security_really_face_an_11.html). Translation: "The $700 billion Bush is currently planning to blindly throw at Wall Street on the proposed plan would have almost been enough in 2004 for him to essentially "bailout" social security once and for all in 2004.