Politico sez Obama will review the bailout after inauguration.

Lefties unhappy with Obama’s evident cooperation with the bailout may take some solace in this, if they believe he’ll truly do anything to fundamentally change the terms of the bailout. I reckon the more cynical among us don’t believe he’ll do any such thing.

As a non-economist, I don’t see why we can’t just take the actual assets (the mortgages themselves) and prop them up by giving homeowners the option to renegotiate them. I noticed a proposal the other day to allow those who are underwater and facing foreclosure to convert their non-conventional mortgages into ordinary 30-year fixed loans with a principal 30% below market value, which would presumably put the brakes on the foreclosure wave, convert valueless mortgage-backed securities into something that actually has value, and halt the slide of all these institutions into insolvency.

Though it makes sense on a basic level I have no idea if this proposal is in any way technically legit, or if there would be any practical way to implement it. As a homeowner who plays by the rules, always pays his bills, and does not live beyond his means, I can certainly see the unfairness in a giveaway to a class of people many of whom are no less frivolous and irresponsible than their hated Wall Street counterparts.

My point is only to wonder, is there a way to do the bailout from the "bottom up"? And if there is, would it be foolish to hope that Obama may renegotiate the bailout on such terms after the Inauguration?

Obama is going to win, by the way, though Chris Rock had a good point the other day:

"Sometimes I think Obama actually thinks that having the most votes is going to mean something. You know? They’ll change it all. They’ll look him dead in the face and go ‘Hey man, you got the most votes! Too bad you lost’."

I do wish we were seeing proposals more imaginative than "give cash to the holders of mortgage-backed securities and attach a bunch of toothless caveats".

I’d like to know more about other honest-to-goodness alternatives.