The Democrats are hitting the right buttons, such as bipartisan oversight of the fund, limits on golden parachutes for failed executives, and relief for Main Street. The deal is not yet final, so we will have to see.
But it seems that two important options are not on the table, and I think they should be.
(a) We could learn from Sweden’s valuable experience from 1992, when they faced a remarkably similar problem (see yesterday’s NY Times and IHT). Rather than buying the worthless assets from the banks at inflated values, the government could buy stock in the banks themselves at the current, low values. This would pump the needed capital into the system to restore balance sheets. It would give the taxpayer a much better chance to be repaid, as the government could resell later at a profit when conditions stabilize. It would remove the reward to investors who let their executives be greedy. Finally, as a stockholder, it would give a real chance to the government to prevent those undeserved golden parachutes.
Apparently, that smacks of “nationalizing the banks”, an anathema, however temporary. Too socialist for this anti-regulation/ pro-bailout government.
(b) We could let the financial system heal itself, and use the trillion dollars to build a modern social safety net and ease the pain to the population. Long term, this would leave the economy stronger and not reward the greed and mismanagement as we are doing now.
Right now, we have to avoid a feeding frenzy on Wall Street when this money is released. Good luck.
Bob
Sunday, September 28, 2008
Subscribe to:
Post Comments (Atom)
1 comment:
Bob Bob Bob!
I have just stumbled upon your blog. We met in Montreal at the Love Exiles session in, what was it, 2005?, I was the American who started to cry in the middle of my commentary from the floor. And we had dinner with you guys.
I am delighted to read that you were a delegate to the convention. Barack was here in Ottawa yesterday and said all right things. I do hope things turn for the best for all of us. Nice to "see" you again.
Jo Anne (and Christianne)
Post a Comment