Let's make this very clear: Government does not now and will not ever create jobs. It isn't the nature of government to create jobs. What government creates is called "work".

What's the difference between "jobs" and "work"? The primary difference is that jobs are self-sustaining. Work is simply an economic black hole - you can pour money into work, but you never get a monetary return on your investment.

Why can't government create jobs? Because politicians are not interested in return on investment, at least not as far as dollars and cents. The only return a politician is concerned about is a return to the polls. The only question a politician asks when spending money is how many votes it will garner or lose them.

The evidence on this is very clear - just look at some of the alleged "jobs" created by the recent trillion-plus economic stimulus created: building roadway turtle crossings (are we charging the turtles to cross?), renovating state parks (which, last I checked, were free), swine odor research (how do we make that pay back?), etc. Almost none of the WORK government spends money on has any hope of a return on investment - except in votes. After all, nobody wants to run over turtles crossing the road, and everyone loves a state park, and who wants to smell swine? It's all very "nice", but it all amounts to public works projects that will never earn back what we spend on them.

Jobs, on the other hand, are self-sustaining. Private businesses almost never hire employees that have no hope of ever earning back what they are paid. Salespeople are expected to sell, construction workers are expected to build, and investment is expected to pay off - not in good will, but in actual dollars. If workers do not pay off, they are fired and someone has to work a little bit harder to make up for the loss. Only businesses can create jobs because businesses are concerned about making money - not earning votes.

If you are confused by the complexities of the current market crisis, you are not alone. The American economy is a delicate and complicated machine. Like a stone dropped in a pond, there can be ripples caused by the slightest disturbance. However, the current market crisis can be boiled down to some very basic events.

The Stone - Improper Lending Policies

There is little doubt what triggered this crisis. Banks and brokers were encouraged by the government to make unreasonable loans and they stumbled over themselves to make it happen. In 2003, the Bush administration warned that these bad loans would lead to a financial crisis, but the warning was ignored by congress. Democrat Barney Frank ridiculed the administration's notion:

"These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." (From U.S. News & World Report)

Congress pushed the "feel good" measures to allow the undeserving-of-credit to obtain a mortgage. Not everyone believed it was a good idea, but most Americans can't accept the concept that the majority of poor people deserve to be poor. Popular demand allowed the liberal measures to pass without serious contest.

The First Ripple - Foreclosures

True to form, the majority of those who didn't deserve a mortgage in the first place defaulted on their loans. Hundreds of thousands of loans went into foreclosure. Banks found themselves holding paper and property with little to no value.

Some assert that adjustable rate mortgages (ARMs) are to blame, and that lenders acted in a predatory manner. As someone who has experienced an ARM, I admit it isn't the most fun loan to repay. However, I wouldn't blame the lender if I wasn't able to pay it. If I know payments on a loan can increase by two percent per year up to a maximum percent, I'm going to figure out if I can pay the maximum percent, not the current percent. That's just common sense. I feel no sympathy for people with no common sense.

The Second Ripple - Fannie May and Freddie Mac

As the top two mortgage lenders, these two institutions found themselves holding the majority of the worthless loans. Investors in these two companies, as well as a number of other financial institutions, lose confidence. They start pulling money. Seemingly overnight, America's financial giants are brought to their knees.

A few CEOs may have caught on and pulled out at the last minute, taking huge investment profits and walking away. Smaller investors wake up one morning to find that many of their investments were worthless. Some people raise an outcry against "corrupt" CEOs that pull out and leave investors holding the bag.

The Third Ripple - A Banking Crisis

No longer assured of any value in a large quantity of their mortgages (referred to as "worthless paper"), banks are also in trouble. People who had no part in the bad investments find that their banks are in trouble. The government at this point steps in because the crisis threatens to overwhelm those who are innocent in the whole mess.

The Fourth Ripple - The Bail-out

This is where we are now. The federal government is now trying to figure out how to fix the national problems that they previously caused by their insistence that everyone deserves a mortgage. Americans are worried that any fix will end up benefitting those who deserve it least. In addition, Americans worry that the fix will be worse than the problem. Any mishandling of the crisis could commit the U.S. economy to a generation-long recession.

Treasury Secretary Henry Paulson is pushing for 700 billion dollars to prop up the failing financial institutions by buying out those worthless mortgages. Cautionary legislators are reluctant to dump that much money into a currently-worthless investment and leave the American people holding the bill for the next fifty years. Somewhere in the middle, an agreement may eventually be reached.

If we are all very lucky, Congress will act rationally and build some controls into whatever they decide to do. These controls need to include accounting reform, industry oversight, and some guaranteed return-on-investment. The last is the most important here. It is possible that by holding the "worthless paper" long enough to ride out the crisis, the paper may increase in value and possibly be sold back at a profit. There needs to be some guarantee that that profit won't go to line someone's pocket, or to pork barrel spending, or to implement some new social program. The only way that money should be used is against the federal deficit or otherwise returned to those who fronted the money in the first place - you and I.