The problem is my mother-in-law and her relationship with our two children. I don't know what to do about her. My husband & I both recognize there is a problem but are not sure how to solve it. Aside from all of the typical complaints, this is the main issue:

His mother spends time with our children and they come home with questions such as "Mom, why does grandma hate you?" Or comments such as "Those dirty Mexicans or blacks or druggies should all be shot", "Grandma says it's your job mom to work all day (which I do outside the home) and keep the house spotless, and be the class mom, etc. etc. etc. and Grandma says you shouldn't have the right to be a mom if you can't do that" "Mom, did you know that Mexicans practice incest, they are all related because they marry their brothers and sisters and have kids".....

She will offer to take the kids somewhere and then tell them that "If it wasn't for me, you would be orphans on the street"..."Thank God you have me to drive you wherever because you obviously don't have parents" on and on and on for thirteen years now. "Mom did you know all homeless people are druggies, that's why they are homeless" "Mom, did you know that if your mom wasn't a druggie, she wouldn't be in the hospital" (my mom is hospitalized due to manic-depression...something I did not care to share with kids at the time but was forced to explain so they wouldn't think she's on drugs or something). Mom, why does grandma hate (my sister-in-law), grandma says she's a hodgy baba and a third world pig. (This also stated to sister-in-law's face at the dining room table one day before mother-in-law went storming out.)

These are common, everyday types of issues with this woman. When confronted, she denies and blames the kids for lying or misunderstanding; or she is only reacting to what they tell her. The problem is also that she blabs her mouth in front of us about other things, and then later denies to our face what she said. When we hear the same types of stories about her negative comments from my step mom, she denies and says she's going to talk to her about that right now... she never said that...or something of the sort.

I can't stand the thought of allowing my children to spend any time with her. I become very anxious and stressed from the moment I know she is coming to pick them up and the entire time they are gone. And then I have to deal with the stupid comments when they return. But my husband says we can't deny her the grandchildren, she's his mom and they are his kids too. Once when my brother-in-law went to a play with her and the kids, he came back and said that if he ever had kids, they would not spend time alone with his mom. Something he did not live up to now that he has a kid several years later.

I can't stand to spend any time in her presence listening to her fantasy life stories on how perfect everything was when... she was raising her children (all of which are denied by her children), etc, etc. How she, who has just recently started working "part time"; has worked so much harder than anyone in the room and spends at least 100 hours per week at work; how could we ever think we deserve a vacation. She used to come home with bloody feet from all her hard work (another fantasy). Believe me, I could go on but it would take too long and I'm getting sidetracked.

Sometimes, my husband thinks I should let her comments roll off my back like everyone else does; she's just crazy (by our diagnosis) and she can't help it. Other times he sides with me, there is a big fight between them, then the next day it's like nothing ever happened and it starts over until the next blowout.

My main concern is that I think she is influencing my children in a very negative and destructive way; not to mention how she can't say anything nice ever unless she's putting on her "phony" act. So what is the solution to this problem? Any suggestions from an objective point of view would be helpful.

Thanks.