Thursday, September 18, 2008
That was short lived.
It obviously didn't take long for Misters Bernanke and Paulson to resume their bailout ways. I am not familiar enough with AIG to know how calamitous a Chapter 7/11 would have been, but I am sure that there could have been ways to work it out. Drexel and Lehman went belly up, and the world didn't end! Anyway, I have been thinking for a while as to what to post because I believe that at this point, the MSM has caught on to what has truly been happening vis-a-vis Wall Street, so I am not sure that I can add much, except my own little quirky commentary. As I am writing this blog entry, the government is considering the massive use of our money to buy "toxic debt" a-la RTC. I cannot even comprehend how much money all of this is going to cost, nor the consequences of such an action. It seems that at every stage of this crisis, the government has tried to throw good money after bad into some sort of damage control (does anybody remember the MLEC?). However, I cannot escape the feeling that this will not end well. The problems seem to be getting bigger and bigger, and the bailouts keep getting more and more expensive. Our government is now in the insurance, mortgage and securitization business. Barney Frank recommend that it opens up a Real Estate office with lots of new inventory. Far cry from laissez-fare. Everybody is now aware that the real culprits in this crime drama were the Wall Street oligarchs who, as financial mercenaries, have put this country on the precipice of disaster. I would like to offer one piece of advice, should anybody come across this little piece. I believe that it is absolutely necessary to prosecute the oligarchs! I know it may be extremely difficult from a political standpoint, but is so perversely injust that we will have to hand over our savings, while the oligarchs who pilfered this country's vast wealth are on their yachts. I believe that there can be great populist sentiment evoked if we prosecute and fine these criminals, as well as confiscate their wealth. This will end all moral hazard problems. If the federal reserve used special powers to assist in the take over of Bear Stearns, why can't we create a Guantanamo for Wall Street crooks (maybe we can even suspend habeas corpus). The government should have a rendition team ready to go to waterboard these guys into divulging information as to how these crimes were committed. But I digress. It need not go that far. Just take away their money in a grand public way, and use the proceeds to recapitalize the Federal Reserve, instead of printing $40 Billion new dollars.