ARROYO GRANDE, Calif. (MarketWatch) -- "What do you call an economist with a prediction? Wrong."

That was the headline of a Business Week column in late 1999, just months before the 2000 dot-com crash.

Yes, wrong: Conservative supply-siders, balanced-budget centrists and liberal Keynesian stimulators, too. All wrong! And the 2000 to 2002 recession proved it.

Unfortunately, everybody thinks they're an economist today, even politicians. But they're bad at it, too. So we need to update the headline to fit the mortgage bailout and other quick-fix solutions to America's problems.

First, the context: Fortune magazine recently put CEOs such as Citi's Prince and Merrill's O'Neill under the microscope: "What Were They Smoking?" The best-and-brightest lost $165 billion, but exited rich, with hundreds of millions.

Now we need to ask guys like Paulson, Bernanke and their Beltway buddies: "What are you guys still smoking?" Bailout? Freeze? Voluntary? They must be smoking hundred dollar bills from lobbyists because this government intervention scheme smells bad.

Why? Because all these solutions are being dreamed up by the same political and financial geniuses who got us into the problems in the first place. The same guys who failed to act before the economy spun out of control. Trusting those same guys makes absolutely no sense! They were clueless going in. They're clueless about the solutions. So, a new rule: "What do you call a politician with a prediction? Wrong!"

Though you may disagree with Dick Cheney, this time he's the only guy inside the Beltway who's got it right. Fortune says "the staunchly free-market Vice President can be expected to resist any impulse to soften the blow with government action." His position: "The markets work, and they are working."

But unfortunately, Bush, Paulson, Bernanke and the Democrats are out-voting Cheney. They're all pushing government programs predicted to slow the record number of home foreclosures and "ease the damage from the housing recession," as USAToday described the short-term goals.

What are they still smoking? Reminds me of Viking King Canute sitting on his throne at the shore commanding the tide to stop. Folks, tides and recessions come and go. And wishful-thinking, fairy-tale solutions won't stop the inevitable, any more than proclaiming this plan will "ease the damage of the recession," but it's "not a bailout, nor a silver bullet."

So let's step back and look at the facts objectively and rationally. Let's look at the 13 reasons why all the bailout fixes are just cosmetic PR that politicians and lobbyists spin for the masses, to gloss over Wall Street's greed and stupidity during the latest bull run-up, while pandering to voter naiveté, undermining America's long-term needs, and proving once again that our leaders cannot manage our nation effectively.

Here are 13 reasons:

1. No bailout for sock puppets ... and not for junk mortgages

Remember all the shareholders who invested in Wall Street's last fiasco, those bizarre, no-earnings, dot-com schemes like Pets.com and its cute sock puppet? Nobody bailed them out after the 2000 crash that triggered a 30-month recession and wiped out $8 trillion in market-cap. This time Washington's just trying to salvage an out-of-control Wall Street.

2. U.S. dollar loses more credibility

Can it get worse? Yes, the dollar will sink lower. Martin Feldman, former chairman of Reagan's Council of Economic Advisers, recommends doing nothing in a Wall Street Journal OpEd piece: "Arbitrarily changing the terms of mortgages held by investors around the world would destroy the credibility of American private debt." But they're doing it anyway. They got greedy, sold junk. Now people don't trust us anymore.

3. Supply-side hypocrisy

It's almost funny. Supply-siders pretend to trust the free market to work out problems. Yet the elite of the conservative free-market supply-siders on Wall Street, at the Federal Reserve and (except for the Veep) in the White House, pushed for and got government intervention to minimize mortgage credit losses created by Wall Street's excessive greed.

4. PR stunt and photo-op

Washington knows this is just a PR photo-op pandering to Middle America's fears. But "it's too little, too late and too voluntary" says a New York Times editorial. "Only an estimated 250,000 borrowers, at best, will benefit" from the mortgage-rate freeze. "From mid-2007 to now, some 800,000 have entered foreclosure. From 2008 through mid-2010 ... there will be an estimated 3.5 million loan defaults." Free market politicians know it won't work.

5. Undermines responsible mortgagees

Many worry the biggest losers may profit most, like speculators. Even junk mortgagees who are able to pay excessive reset rates may get no breaks. Moreover, the damage will spill-over to the tens of millions of responsible homeowners who are current on their mortgages. Plus, they will be indirectly penalized; for example, if they have to sell, they'll compete against mortgagees getting bailout benefits and tax breaks in a down market.

6. Taxpayer revolution coming

Wall Street got too greedy, made mega-billions. The average managing director made $2.52 million repackaging mortgages. Bubble pops. Housing collapses. Defaults. Foreclosures. Local revenues dropping. Federal, too. A Wall Street Journal editorial put it bluntly: "More than 95% of homeowners are making payments on time, and they believe it is unfair to pay more taxes to assist those who've been less responsible." Still, it's happening and they're angry. Expect a rebellion. This is Wall Street's problem, not the taxpayers.

7. Déjà vu Spitzer and Enron

New York Attorney General Andrew Cuomo has already subpoenaed Wall Street. Next: Congress, the SEC and other state regulators will demand answers, such as why was Goldman shorting the SIVs they were selling, many of which quickly went into default? What did they fail to disclose? Sounds like a massive conflict of interest with major liabilities. These hearings could drag on a long time, further undermining the international credibility of the dollar.

8. Washington was hiding the truth

As recently as August, U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke both proclaimed that our subprime/credit problems were "contained." Then, suddenly, they were a "contagion" enflaming recession fears. The truth: Both had the data long before August, and mislead us. One is a former chief of a leading Wall Street bank packaging the SIVs. The other is our Fed boss with a staff of thousands of economists and data-crunchers. They knew the truth many months ago, and did nothing.

9. Washington's priority? Wall Street

Remember, Paulson's first response in August was not to help the two million subprime mortgage holders. No, Paulson's first response was to create a $100 billion bailout fund to help his old Wall Street cronies keep all those junk mortgage credits off their balance sheets. More conflicts? You bet. Enough to make Chris Dodd, chairman of the Senate Banking Committee, threaten a formal investigation of Paulson.

10. American economy unmanageable

Maybe America's $13 trillion economy is just too darn big and complex to understand, let alone manage. Remember Bush Sr.'s chairman of the Council of Economic Advisers, Michael Boskin? He miscalculated U.S. tax revenues by $12 trillion a few years ago. Remember the low-ball estimates of drug entitlements? Or the estimates on Iraq war costs? We're in denial, unable to see or admit to -- let alone deal with -- big issues such as Social Security, until too late. Worse, our political quick-fixes handicap future generations.

11. Law of unintended consequences

Remember how everyone thought biofuels would make America oil-independent? Instead, feed prices shot up, and then the price of meat, as distribution costs soared. Today, we know it was all payback to corporate agribusiness for campaign contributions. Same here: Wall Street's a huge campaign donor. Too many unknowns can trigger blowback.

12. Prolonging recession pain

Washington's trapped in short-term solutions again, ignoring the future. Rate freezes will drag out the recession, ultimately making it worse. Property values will drop further, new home construction will be delayed, equity-to-mortgage ratios will fall, but the income of junk mortgage owners won't improve in a recession.

13. America needs a good recession

Deep down, Washington and Wall Street know you can't stop the coming downturn. Recessions are natural, inevitable, essential; a positive way of cleaning out the excesses of a prior bull market. So stop whining. It will flush itself! Stop fighting, go with the flow. When I was at Morgan Stanley, the Dow was around 1000. We lived through the brutal 1970s recession. We've grown stronger through a few recessions since. We're now above 13,000. We'll live through the 2008-2009 recession.

And we'll come out even stronger.