The AP headline actually read: Regulators pledge to shore up financial system. However, the brilliant plan that these “regulators” have in mind “includes the option of increasing government ownership in financial institutions.” That is not just making the problem worse–not fixing it.

Apparently, this new scheme to increase government ownership won’t cost more taxpayer dollars.

“In a new twist, regulators have the option of allowing the government to boost its ownership in banks without having to pour more taxpayer money into them. That would be done through a technical change converting the status of the government’s shares in a financial institution.”

What? So we are going to fiddle with the numbers? I am no financial wizard but, unless you are buying more shares of a company, how else would you own more of it? Changing types of shares does not magically increase the value you had in the company.

I’m going to say that this will cost more taxpayer dollars and be a waste. We already own 80% of AIG and apparently they need even more money now. AIG is currently a penny stock–what a sight to see. This is a zombie company that needs to go out of business.

These regulators are some of the biggest users of Doublespeak alive.

“Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption (of the program) is that banks should remain in private hands,” the regulators said.

It is true that the economy functions better when managed in the private sector. What isn’t true is that these regulators want to keep it that way. They talk the talk but, fail to walk the walk. The government owns more percentages of banks with each passing week. Nationalization is said to be “off the table” but, it is going to happen at the rate we are going.

The markets are continuing its downward spiral as the government refuses to let bad debt be liquidated so that smarter people can manage the resources left over. As the Austrian School has been preaching: you cannot solve the problem of too much credit with more credit!

Economics is going to take center stage for the Obama administration this week. Obama is having a Financial Stability Summit with a variety of people including cabinet members, economic aides, and Congressional leaders. He will then speak to Congress on Tuesday at 9PM about the economy.

On Thursday, Obama will unveil his budget and plan of action to “fix” the economy. The markets fell off a cliff last week and is still sinking today. The markets may or may not rally after Obama unveils how he will manipulate the economy and cause capital to move into areas that the market feels it should not.

Obama also pledged to cut the budget deficit in half by 2013. I suppose if you increase the deficit enough, cutting it in half would be less difficult. $500 billion deficit looks better than $1 trillion but, it is still pretty astronomical.

Chances are all the spending will do nothing to fix the economy and surely make things worse. It hasn’t worked in the past. Even the crazy Keynesians like Paul Krugman agree it hasn’t worked in the past. They just think there wasn’t enough spending–how laughable.

Ford Models CEO, John Caplan, predicts that the outlook for retail in 2009 is worse than we think. I can’t say I would be surprised if it is worse than what we are expecting. This is a time for saving and not consuming. The American people aren’t idiotic.

The retailers who are going to suffer aren’t those who provide real things that we need. Those who will suffer are those who sell extremely expensive items unworthy of its value. There will be a smaller market for people looking to buy $500 shoes so the companies who produce those items will need to scale back.

I was in a Gap store recently because I had a gift card. I haven’t shopped at Gap for a long time. I didn’t find their products to be that interesting. This was President’s Day and Gap had a sale going on–sales are the norm these days. I didn’t know if the store was open or closed from the outside.

There wasn’t much traffic. It was open and I did buy a couple of things but, the store was pretty quiet. Gap did experience a 23% decline in same store sales last month. Things are certainly not looking rosy.

As I always say, we need the government to get out of the way for this crisis to pass faster. Instead, we have bailout and stimulus packages being signed into law. Obama unveiled his mortgage relief plan today. I’m not entirely sure why keeping people in debt and chained to their quickly depreciating home is a good idea. They can shake off the chains of this massive debt and start over. There is nothing wrong with renting.

Body scanners replaced metal detectors in Tulsa International Airport as a tryout. The idea behind these wonderful machines is to provide outlines of your body underneath your clothes.

“We’re getting closer and closer to a required strip-search to board an airplane,” said Barry Steinhardt of the American Civil Liberties Union.

The insanity of all these security measures is that they do not protect us. They are only taking away liberties. I will specifically choose not fly into or out of the airports that employ this particular device. I’m already sick of the normal security measures of taking off your belt, shoes, etc. This is not going to fly.

J.H. Heubert at LewRockwell.com proposes boycotting the airports usingthe technology.

The Austrian School of Economics foresaw this years ago. The standard of living for Americans is going to be much lower for many years to come because of the government created financial boom. The financial stimuli that the government is throwing at the problem is only going to make our standard of living that much worse.

“The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car,” Davidowitz says. “A lot of that is gone.” To paraphrase Ron Paul, an economy that lives above its means is destined to live below its means. The price of homes and schools were way too high-price of schools are still way too high. Economic sanity is going to return the American culture.

The end of American consumerism is a good thing. There will be no more going to malls because we are bored and buying useless crap because we have nothing else to do. The pain is going to come no matter what government does. The government can affect how painful it will be. It can make it less painful by getting smaller and decreasing spending. it can make it worse by getting bigger and increasing spending.

In true government fashion, it has chosen the latter route. It tells us it is here to help. It speaks as if no government action will result in the end of the world. The reality is that increase in government will make the problem many times worse than it already is.