A corporate bread line has formed in DC. Ragged, stubble faced corporate executives in moth-eaten suits and shoes with soles that flap loosely with each step, have accumulated outside Treasury with dire tales of heartache and dread.

Insurers who take our money under the promise to cover our misfortunes have their crusted hands cupped and held up for some alms. It seems there was some trouble with their risk modeling. Their PC’s dropped a decimal place or two and now they can’t find the money we gave them.

Auto manufacturers who suffered from strategic deafness during the last two decades re: fuel efficiency standards, alternatively fueled vehicles and the drying up of the oil patch, ply the Treasury with a sour tale of frightful times ahead if they and their strategic autism are not allowed to board Henry’s Ark.

And the bankers count their recap funds as they look out the windows of Treasury at the poor lot below, shuffling in the cold, practicing their beggar’s sonata.

Where does all this get us? Somewhere after the “CHARGE” command was uttered and the Generals of the Treasury and Federal Reserve led the way into the fray, the compass was dropped. None of this amounts to a coherent strategy to assure the flow of capital and secure economic stability.

The very valuable asset-backed security exchange program has now been completely scrapped. An abbreviated alternative has been instituted under the bank recap approach which is doing nothing to get the capital into circulation.

The sage leader of JPM was quoted at a banking conference saying he expects the recession to be a far worse bane on the US than the “financial crisis”. He must not think the one begets the other. How does an economy grow when the rescued bankers’ fists are balled up with all the federal (taxpayer) money?

And what of foreclosure fix #999, where non-performing loans are reworked against a formula capping mortgage payments at 38% of income and reworking loan duration and rate to shoehorn things into a pinched fit? The guys that didn’t understand you can’t lend wildly into a decade of flat incomes still don’t realize all the king’s men can’t make their dead horse run.

Home values will continue to fall until they are at the level incomes can afford them. Since incomes are evaporating with job losses, that target keeps going lower. This means every $1 of federal (taxpayer) money that is borrowed by Treasury to support the delinquent mortgage holder relies on the mortgage holder to help pay the $1in taxes needed to fund the handout they get from Treasury. Where does that leave Treasury (and us) when the mortgage holder with the re-worked terms loses their job and means to pay under any terms?