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TRINIDAD, Colo. (Oct. 9, 2008, 12:51PM) -- Until yesterday your choices for depositing safe money around the globe were basically Ireland, Germany or the Mafia.

Developments in the United Kingdom and Italy may ease some bon and stock market pressures, but on the eve of an emergency G-7 Finance Ministers' meeting Friday, I will provide them with a list from my money prescription pad, which, like my kids, they will likely ignore.

First, how we got here, or rather the last few days of how we got here. A week ago, facing a whoosh of exiting funds, the Republic of Ireland told the investing world: "Deposit funds in an Irish bank and our government's full faith and credit insures everything, no limit to the size." Deposits flowed back.

A few days later the German government, seeing the start of a subprime slime slide a la USA 2006-2007, did the same thing.

Iceland tried the same thing, but an entire nation with the population of Anchorage was so overextended that it is still searching for a basket of benefactors to insure their deposits. It looks like they have to rely oin Russia to bail them out.

About 20 years ago the United States Treasury looked the other way at alleged Mafia influence in some labor unions, and made a de facto decision that the Continental Illinois Bank was "too big to fail" and insured $5 billion in Teamster pension accounts. The $100,000 FDIC account insurance limit for one bank at one time was waived, and that Chicago bank became technically the "safest" in the world that was officially broke.

Last week FDIC at least temporarily told people that the "new" insurance level at your bank will be $250,000 per account. The truth is that most people I have met in my financial world life never have to worry about ever having $100,000, or about the other end of the spectrum: personal and retirement accounts that often well exceed $250,000.

These positive new developments came while I watched the "Question Period" at the House of Commons in London and saw cross-party endorsement of a plan that guarantees the transfers taking place between banks, creating much needed trust and liquidity, and placing one baby step on ladder to recovery.

A few hours later, Italy, whose banking system had less global involvement than many other Eurocenter economies did something innovative. The Italian government said if, and only if, a bank felt crimped for collateral, the government would purchase "preferred" shares of bank stock. The government would not have voting or common shares, but would participate in any rise in preferred stock price, have an interest in the success or failure of the bank, and it agreed not to interfere with private investment and private consumer trusts within the bank. That was another possible win-win for lenders and investors.

So, as the G-7 Finance Ministers meet, here is a prescription for their drugstore of international markets.

• Mandatory uniform code: If Ireland's plan works it needs to be the law in each G7 country. When Americans are moving $2,000 savings accounts from bank to bank because they fear a bank "holiday" during an FDIC takeover, all solutions must be country-neutral.
• Lift the ceilings: all banks that are chartered through a federal or comparable jurisdiction and that are subject to the usual and customary inspections and audits should be able to tell the public: all American (German, French, British, etc.) chartered banks, for deposits of any size, are insured in case they fail. Now and in perpetuity. Period.
• Primary residence rule: a mutually-agreed-upon discounted mortgage rate in each country will be available for a personal and primary domicile, or a residence for an individual or family. If Spain has 30-year fixed mortgages at 7 percent, for your personal home it might be 6 percent. Speculators, vacation home purchasers, condo developers, etc., pay a higher rate. The converse of this gift will be that Interpol will track and will enforce by treaty in all G7 nations any mortgage origination, application, processing, collection, and packaging fraud.
• Uniform threshold: set enforceable felony thresholds for fines and/or prison for mortgages issued to people whose monthly mortgage payment exceeds 25 or 30 per cent of proven monthly income. Primary residential mortgages will no longer offer a many-flavored Baskin-Robbins menu. There will be two flavors allowed: 15 or 30-year fixed. Speculation, commercial, and flipper loans, etc., can still use exotic mortgages but will get no implied government protections or bailouts.
• Global insurance clearinghouse: the world can no longer trust ancient consortia such as Lloyds to protect policyholders from hurricanes, earthquake or terrorists. When AIG catches poison ivy, Belgium, The Netherlands, and France start scratching. Japanese are insured by American companies. Americans are insured by Canadian, British, French, and German companies. German insurance companies own American mutual fund managers etc. The G-7, perhaps through the World Bank or the International Monetary Fund, needs to make whole companies such as AIG that are "too big to fail" - not for the peace of mind of policyholders alone, but for re-insurance liquidity. Then they can make them smaller.
• Fifty ain't nifty: Having insurance company rules in Tallahassee differ from Albany, which are similar but not like Sacramento and unrelated to Santa Fe and Hartford, is archaic. States' rights may work for fishing permits and vanity license plates, but they don't work for my son in Iraq, who is a Floridian with a policy purchased in North Carolina before he got stationed in Arizona and started getting statements from an insurer in California. Let the 50 state insurance commissioners become a strong enforcement arm of a single federal insurance code in case of the bankruptcy of any American insurer.
• Social Security solvency: as with abortion rights, national health care, and baseball's designated hitter rule, those who disagree on self-directed (no, not "privatized") social security will never agree, so the current crisis offers us an opportunity to let compromise solutions have a chance. If and when some of these "work-out" assets accumulated in the federal banking system turn out to be profitable, turn the gains not into the general account but into the Social Security Trust Fund to eventually assuage some of the estimated $3 trillion 401k and other pension losses for Americans. Spain and Chile are among countries already using streamlined reforms for retirement, but all the G7 countries can join with the USA in re-funding retirement accounts.

Perhaps a longer-term answer is one proposed by The American Reporter's editor, Joe Shea. Borrowing from an early essay by Ralph Waldo Emerson, he suggests collateralizing our U.S. dollar with fixed amounts of agricultural commodities, which he says will be the most valuable of all commodities less than a generation from now.

Joe would also change the unit of currency from the dollar to the cent, thus vastly simplifying the entire system of accounting for trillions of dollars in national wealth (British stocks are currently valued in pence, by the way).

Doing these two things would make Americans by far the richest people in the world, Joe says, and would restore real value to our money that can then translate into economic security and certainty. Gold, which is not tied to the value of the dollar as it once was and as commodities now can be, would still retain its great value as a precious metal, but speculation in it would be limited by the same limitations that weigh on other commodities.

Money's value was stated in commodities almost from the time money originated 50 centuries ago; today, we have some degree of trust in pieces of pretty paper - this week, anyway. That is why we can throw trillions at AIG and a bunch of crooked banks. That's why a Zimbabwean was paying a billion dollars for a gallon of milk.