For homeowners and bankers who took advantage of the housing boom and easy credit conditions to borrow far beyond their means, congratulations! You can expect to receive the greatest benefits from the government's new $700 billion bailout plan, with your greed, ignorance, or self-defeating financial decisions handsomely rewarded.

The new legislation significantly reduces the possibility of foreclosure (let alone sheriff sales or eviction) for those homeowners whose mortgage is taken over by the federal government. Because the perception in political spheres is that foreclosures are bad when they are being reported on the news, the government has indicated it will work with borrowers on mortgage modifications.

Especially now that greedy corporate CEOs of financial investment firms and insurance companies have been bailed out, with banks next in line for direct capital injections, politicians can not go back to their constituents proclaiming the virtues of the free market and that foreclosures will be tolerated as a necessary mechanism to liquidate bad debts. Foreclosure, like impeachment, is now off the table.

Homeowners who leveraged a home close to or more than 100% of its value during the bubble will be rewarded the most, since banks will not want to keep loans on properties that are underwater. These will be the first defaulted mortgages dumped into the new government TARP, and borrowers have little incentive to make the monthly payments.

Especially if there is a possibility the government will renegotiate the loan balance, the incentive is actually to stop paying and just keep living in the property until the bank sells the loan to the government. Then owners can negotiate with the bureaucrats to lower monthly payments and the loan balance to a more reasonable level, and the government will sell the mortgage back into the private market, leaving taxpayers to eat the loss.

Prudent home buyers who had saved money for a down payment will find that the bank will keep their loans, however. It is more profitable for them to foreclose on homes with equity and resell the properties on the market. Thus, savers and the financial responsible who face foreclosure due to economic hardships, as opposed to not wanting to make the payment on a house underwater, will get no help from the government program.

In fact, if homeowners know a greedy corporate CEO, it may be wise to partner with him in order to create more fake money out of thin air in a cash-out refinance on a hugely over-valued property, split the proceeds from the loan, and immediately default. The bank can sell the loan to the government and the balance will be negotiated down. Loan fraud has never been so easy when the government rewards it!

Car loans and credit cards are next, of course, with defaults rising in each of these and the TARP authorized to take on securities backed by such categories of debt. The more defaulted credit cards one has, and the larger the balances on each, the more likely homeowners will be to convince the government that all of their debt should be negotiated down due to poverty.

The president's advice after the attacks of 9/11/01, "go shopping," holds true more than ever now, since the government will pay for all of your purchases. The more cash you can take out of your home, ideally with a fraudulent appraisal, and the more you can put on your credit cards before your limit is restricted, ideally on cards you obtained through misrepresentation, the better your chances are for receiving some of the $700 billion bailout. And it is better to receive a part of it than to have to pay for it, right?

Obviously, most people will not go to such lengths and take advantage of their credit lines, and the very idea surely sounds absurd and predatory. Most people live within their means until inflation (caused by government printing money out of thin air to finance such programs as Wall Street bailouts) causes them to fall further and further behind. Few consumers voluntarily chain themselves to so much debt they will never be able to pay it back or commit fraud on banks in order to get free money.

But that is the point -- the government encouraged this kind of moral hazard behavior in banks for decades with one bailout after another, and now it is rewarding the same behavior in the average citizen. We are all greedy corporate CEOs now, living off borrowed money until the government bails us out of our inevitable failure. Federal backstops against failure mean that everyone can take on high levels of risk and then expect to be bailed out anyway.

No failure left behind.