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Posted: February 6, 2009 12:00 a.m.

Bathtub economics

 Not satisfied that we have all taken quite a "bath," economically speaking, the Obama administration, with bipartisan swim trunks on, is about to give us another one. Or at least that is how I interpret the

plans to simply flood banks and other parts of the financial sector with funds.

 I have trouble thinking of a more wrong-headed policy.

 Follow these steps to understand the economic collapse and proposals to deal with it.  

 First, gather up your children’s bathtub toys, at least seven or eight of them. Put all of them in the bathtub, put the stopper in and fill it three-fourths of the way full of water. See how high they all are in the tub? Mark that level.

 Let about half of the water out of the tub and put the stopper back in. See how much lower all the toys sit in the water? That is what happened when the economic bubble collapsed. All the mortgages and debts instruments were written at the top level of the water. Now they are at a lower level.

 Try to pour water so that only a toy that represents a bank get higher up than other toys in the tub — or one that represents a mortgage company, auto maker, home owner, etc. That is a good illustration of the current bail out strategies — pouring water on one particular toy, hoping that it and only it will get higher up in the tub.

 Finally, send this column along with one or two bath toys to your state or federal representative.

 

 Patrick Durusau is a resident of Newton County. His columns regularly appear on Fridays.

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