jacosa

How to Spend $700B and Actually Solve the Problem

I'd like to float "A Modest Proposal." For $700,000,000,000 (it DOES look pretty big with all those zeroes actually written) the government could go a long way toward paying off those shaky mortgages underlying this mess. That would take the pressure off the banks. Think about it.

The social consequences would be horrendous, and it's pretty obvious that there would be an artificial boom that would make 1999 look tiny. So maybe a few less hundreds of billions might be a better number: saving money on a bailout isn't bad.

Government Bailout: We Are All Keynesians Now

I'm sure a Keynesian, and my SEVERE problem with what I've heard about the proposal on the table is that it seems to neglect velocity of money issues. Buying bad assets will eventually free up credit, but it doesn't look rapid. Something closer to the consumer might rescue Christmas retailing and turn over more times in the immediate future.

On Short-Sellers and Dishonest Executives

Obviously, insiders have a piece of the business that they could sell if they chose to, and will react negatively to anything that hurts that as a way to raise money. So they'll gripe about the shorts, and not about anything that creates artificial demand.

I'm an investor. Any irrational move threatens me (I can pick my opportunities, but that runaway truck could come through anywhere). If a company mends its evil ways and seems poised for a turnaround, a determined bear raid can drive it out of business. That's as bad for me as a rockstar CEO producing an unjustified run-up, and a good deal harder to anticipate.

So? Well I'd sure like to have the uptick rule back. And on the other side I'd like to see legal margin requirements (and related capital requirements) used to push back on buying stampedes.