In the children's story, Chicken Little sounds an alarm that is both sincere and naive: ''The sky is falling, and it hit me on the head.'' Like the figure from the bedtime story, President Bush claims that the sky will fall if we do not save Wall Street.

Bush conflates the interest of Wall Street billionaires with the interest of the American people. The sky will not fall if the banks go bankrupt.

Harvard economist Professor Jeffrey Miron has noted: ``Bankruptcy does not mean the company disappears; it is just owned by someone new, as has occurred with several airlines. Talk of Armageddon is ridiculous scare-mongering.''

I have the same problem with the bailout that I have with the war in Iraq. The idea of fighting in Iraq was to send U.S. forces where they were needed in the war on terror. But they were needed to go after Osama bin Laden. He attacked us, not Saddam Hussein. We misdirected our resources.

This is a similar proposition. The story of disaster on a biblical scale is fed by the distortion that the $700 billion actually will go where it is needed, that the government is actually buying up bad mortgages. This is not accurate. Economists Ari J. Officer and Lawrence H. Officer have written that the bailout is for mortgage-backed securities.

Most important, both Bush and Treasury Secretary Henry M. Paulson mistake cause for effect. The root cause is the collapse of the housing market. In this country there are 10,000 foreclosure filings a day. It s estimated that 3.5 million people could lose their homes as a result of the current crisis.

This tidal wave of foreclosures threatens to sweep away whole communities, leaving in its wake abandoned houses, joblessness, the collapse of all industries connected with housing, the collapse of prosperity itself. Incredibly, Paulson's proposal, like the federal government after Katrina, leaves the hapless homeowners adrift in a flood of foreclosures cascading over the American economic landscape.

Bush is speaking from the perspective of the perpetrators. We need to reframe the issue in the broader perspective of the American people, the perspective of the victims of Wall Street's excess. We need to rescue these victims, the working families who are losing their homes, not the perpetrators of the crisis. The federal government needs to massively restructure loans, lowering the cost of loans to borrowers. This restructuring will stop the wave.

Once the tidal wave of foreclosures has been stopped, the housing market will recover, though at more affordable prices. In turn, the majority of financial institutions will recover. This would represent a degree of debt forgiveness. Strong medicine. But this is precisely the prescription Franklin D. Roosevelt used to end the last depression.

History has come full circle. We are on the threshold of another 1929. And the formula that saved us then will save us now if we have the courage to use it. The formula comes down to this. It is a paradox, I admit: We must save the victims of the housing crisis in order to save the institutions, which perpetrated the disaster.

DONALD JONES, law professor, University of Miami, Coral Gables

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