Q: The $700 billion figure. If you multiply roughly 3 million homes in foreclosure by $100,000 -- assuming they are underwater on their mortgages by an average of $100,000 -- that's "only" $300 billion.

A: So where's all this money going, huh?

Q: Yes.

A: Propping up derivatives; that's the scam. It's the so-called "illiquid assets." I think that's a misnomer. I think it's "worthless assets" that are being bought up so some of these big guys don't get wiped out.

Q: You say a $700 billion bailout is only a temporary fix.

A: Yeah, it is. If you come to the conclusion that you have to liquidate debt, the faster you get it over with the sooner the economy goes back to work. So they're propping up the prices artificially on houses and at the same time they are saying, "How can we stimulate housing growth?" Well, there are too many houses. You want the supply and demand of houses to adjust, so you let the prices of houses come down and let the houses get in the hands of people who really want them and can afford them and you quit building houses for a while.

So, yeah, you have a booming economy when you deceive the people and you stimulate the economy with easy credit. But you've got to make up for it eventually, and that's the part that nobody likes. We have prevented any attempt at correction essentially over the past 20 years. So we have a bigger bubble than ever before, which means we'll have a bigger correction than ever before. So the only question is, should it be a short, tough correction or a very long, tough correction?

Q: What is your solution for avoiding this kind of sudden national emergency?

A: You need to allow a liquidation of debt, which means bankruptcies. You should treat it like Lehman Brothers -- let them go broke and the good assets will be bought up. But you should restore confidence and encourage business activity. It isn't a lack of regulation that was the problem, it was the lack of the market being allowed to work.

We don't need more Sarbanes-Oxley (financial reporting) regulations like those that came out of Enron. But we should assure the markets that we are going to live within our means. I think the federal budget ought to be balanced. You could do that rather quickly by changing our foreign policy. But people aren't quite willing to give up the welfare-warfare state. But if you did that, things could come back very quickly.