Wednesday, September 24, 2008
Tuesday, September 23, 2008
- No Bailout without equity - if we bail out a firm, we should get a share of it. If the firm asks for a bailout they should be putting up a portion of their company to get it. Your share of that contribution should come in the form of a mutual fund managed by the government and formed from the shares of equity that we get from bailing out these firms. If they make it back to profitability someday you'll enjoy the upside of buying low and selling high.
- No Bailout without affirmative punitive action - the bailout should be tied to regulations that prevent this from happening again, and take punitive action against those that let it happen in the first place.
- Save the derivatives - short selling is the grease that primes the investment wheels. People make investments because they can hedge those investments againt the unpredictable by investing in shorts as well as longs. An economy that's all longs doesn't allow easy adjustment when there is another downturn. And there WILL be another downturn, it's inevitable.
This solution was good enough for Sweden. Should work for us too...
The market is down - but a large part of that market adjustment is that prices were inflated and way above the market valuations. It was time for an adjustment. Let's look closely at whether we ride this one out with as little government intervention as possible in the market itself (outside of perhaps establishing some regulation of the mortgage investment market) or we throw dollars at a problem that may just sort itself out given time.
Let's not rush into anything. Let's especially not rush into anything President mc-spendalot suggests.