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The concepts of democracy and free markets were the winners today (Sept. 29) when the House voted narrowly to reject the socialistic banking bailout package that was heavily- and deceptively-loaded in Wall St.'s favor. Voters were astutely, overwhelmingly against it. First, no one country has enough fingers to plug the holes in the banking dikes around the world. There has to be an internationally-coordinated rescue plan. The world is overleveraged; this is particularly true in the U.S., where consumer, government, and financial debt is at absurd levels. This is a major cause of the credit crisis. As the world deleverages, as it must, there will be economic pain. Growth will be much slower, and often negative. Any U.S. package should make sure, if feasible, that the bulk of the pain hits the malefactors: the banking industry/Wall St. gunslingers who have been gambling with borrowed money, piling up more than a quadrillion dollars in derivatives that threaten to explode in a chain reaction. There were several things very wrong with the package the government presented. The so-called lid on CEO pay was a joke -- easily evaded. There must be a lid on TOTAL chief executive compensation -- salary, bonuses, stock options, everything. Anyone caught trying to evade the restrictions through offshore maneuvers should go to prison; that provision should be written into the bill. Also, the oversight was a joke. The bill would have given dictatorial powers to Treasury Secretary Paulson, whose own statements make it clear he either never saw the derivatives freight train coming, or wanted to maximize his own and his firm's earnings before it hit. Fed Chairman Bernanke was blissfully ignorant, too. The top job should go to somebody like Warren Buffett, who foresaw the problem. Judges should be given flexibility in housing-related cases, too. This bill punished the wrong people, innocent taxpayers, and lined the pockets of the guilty, bankers and Wall Streeters. President Bush must be told to fire Paulson and come back with a palatable package. The stock market may plunge in the interim (it may be manipulated downward), but this is the cost of getting a bill right.
The concepts of democracy and free markets were the winners today (Sept. 29) when the House voted narrowly to reject the socialistic banking bailout package that was heavily- and deceptively-loaded in Wall St.'s favor. Voters were astutely, overwhelmingly against it. First, no one country has enough fingers to plug the holes in the banking dikes around the world. There has to be an internationally-coordinated rescue plan. The world is overleveraged; this is particularly true in the U.S., where consumer, government, and financial debt is at absurd levels. This is a major cause of the credit crisis. As the world deleverages, as it must, there will be economic pain. Growth will be much slower, and often negative. Any U.S. package should make sure, if feasible, that the bulk of the pain hits the malefactors: the banking industry/Wall St. gunslingers who have been gambling with borrowed money, piling up more than a quadrillion dollars in derivatives that threaten to explode in a chain reaction. There were several things very wrong with the package the government presented. The so-called lid on CEO pay was a joke -- easily evaded. There must be a lid on TOTAL chief executive compensation -- salary, bonuses, stock options, everything. Anyone caught trying to evade the restrictions through offshore maneuvers should go to prison; that provision should be written into the bill. Also, the oversight was a joke. The bill would have given dictatorial powers to Treasury Secretary Paulson, whose own statements make it clear he either never saw the derivatives freight train coming, or wanted to maximize his own and his firm's earnings before it hit. Fed Chairman Bernanke was blissfully ignorant, too. The top job should go to somebody like Warren Buffett, who foresaw the problem. Judges should be given flexibility in housing-related cases, too. This bill punished the wrong people, innocent taxpayers, and lined the pockets of the guilty, bankers and Wall Streeters. President Bush must be told to fire Paulson and come back with a palatable package. The stock market may plunge in the interim (it may be manipulated downward), but this is the cost of getting a bill right.