There is an old nursery rhyme that is eerily applicable to what has happened to the stock market and the nation’s economy. “Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall, and all the King’s horses and all the King’s men, couldn’t put Humpty Dumpty together again.”

It’s that last line that is particularly frightening because no one has put forward a plan to put our failing economy together again. The Treasury Secretary, having declared that unless he was given $700 million immediately, the crash could not be stopped and would bring down with it the economies of other nations. The $700 million was approved and after a month the crash has not even been slowed.

In fact, no one seems to know what to do with the money. A portion has been made available to stop the increasing number of foreclosures, but so far how to do it consists of a plans yet to be fully implemented and can only apply to mortgages owned by Fannie Mae and Freddie Mac. The plan restricts help to homeowners already three months behind in their payments and facing immediate foreclosure.

An obvious side effect is that it could cause homeowners who have not yet defaulted to do so in order to qualify for help. Until qualified homeowners can be identified, the agencies have suspended all foreclosures. Unfortunately, the two agencies have only marginal impact on the plague of foreclosures because only 400,000 failing mortgages are likely to qualify.

Over 4 million troubled mortgages are owned by companies in the private sector and slowing foreclosures here is enormously complicated. Some investment companies are already allowing defaulting owners to reduce their monthly mortgage payment by reducing the amount owed to the value of the home in today’s housing market, or extending the loans to 40 years, or simply reducing the monthly payment, differing to some future date when the payments would be increased to “catch up”. Like the Fannie Mae plan, these voluntary actions impact too few failing mortgages.

Most sub-prime loans were bundled together standard loans into packages of many mortgages, referred to as a “bond”, and the packages sold to investors. Some the individual loans included in the package are now failing, others not. Singling out from the packages just those loans needing relief is difficult and whatever the form of relief, it will decrease the total value of the bond package. This would require the approval of every investor who owns a piece of it.

Worst of all, a market expert, after reading this paragraph, said, “Yes, this is all true, but it’s not that simple.” That’s because some of the bonds were used to create even more esoteric financial instruments tucked away in hedge funds and other shadowy place in the market.

Another factor in giving relief to homeowners facing foreclosure is that some of the mortgages are on houses not occupied by the owner. These are homes, sometimes as many a half a dozen or more, were purchased by speculators planning to quickly resell them when the booming real estate market increased their value. While experts say it may apply to only 7 percent of home foreclosures, in states like Florida, Arizona, Nevada and California it is true of as much as 25 percent of foreclosures. Care must be taken to assure no taxpayer money is given to these speculators.

The simplest solution, Fannie Mae and Freddie Mac buy every one of these bonds and as owner the agencies could take what ever action they pleased. But this would cost so many trillions of dollars that it is virtually impossible. Another proposal is to alter the qualifying requirements to file for bankrupt under Chapter 11; it would give a court the power to renegotiate all debts. This takes an act of Congress and would be of questionable legality, opening a mine field of law suits and appeals.

Of course, there is always the solution advocated by some law makers and economists, no matter how painful, simply let the foreclosures happen. The Catch 22 is that after foreclosure banks want to quickly get the home off their books and dump them at fire sale prices accelerating the fall of the housing market. Finally, keep in mind that after 8 years of the Bush administration the U.S. is so far in debt that no matter what it does, to do it the money must be borrowed from China, the Arabs and other countries.

What is most scary about all this? The problem created by foreclosures is only the tip of the iceberg within the overall crisis of our failing economy. Some economists are saying that, like Humpty Dumpty, our economy cannot be put together again.

We must build a 21st Century economy from scratch. In the meantime, these gloomy economists say we are doomed to a deepening recession.