Lawrence J. Kramer

TARP Surtax Bill Could Create Millionaires

I think there's a decent chance this bill does not become law. The real reason is that it's unconsitutional and bad policy, but neither of those reasons are politically acceptable to the torch and pitchfork crowd, so some other pretext for scuttling the bill will have to be found.

It's all theater anyway, as the courts won't let the IRS collect a retroactive, confiscatory excise tax. Well, maybe not ALL theatre: the courts may strike down only the retroactive part, leaving the bad policy in place to tie the hands of managers going forward.

Treasury's Actions Not in Our Best Interest

The only thing that matters in this mess is that our credit markets, fueled primarily by petrodollars, continue to operate. Every suggested solution, and every announced objection, must be measured against the possibility that we will wake up one morning unable to borrow anything from anyone. All other objections may be correct measures of the damage we have done, but that's all they are. The damage has been done: we are merely doing what we can to minimize it, but without forgetting that the best is often the enemy of the good. We must act quickly, under circumstances that virtually assure that what we do won't be the '"best" thing we can do, but will be the best thing we could have done quickly, which is really all we can expect.

Robin Hood in Reverse: In Defense of the U.S. Taxpayer

The ellipsis inserted by the blog software in my prior comment hides a long list of other roles that "taxpayers" fill. Also, I say that Mr. Ehrenberg has not discussed the consequences of his prescription because what he is proposing deals only with the asset side of the equation, not, for example, how credit ratings are preserved to prevent defaults on covenants that support liabilities we cannot as a nation afford to walk away from, even if that means socializing loss. Not every cost is too high to pay.

Robin Hood in Reverse: In Defense of the U.S. Taxpayer

There is one simple test of any rejection on the rescue plan: does the author discuss what he believes is the correct alternative and its consequences. Mr. Ehrenberg has not done that.

The issue here is not the rescue of the investment banks, per se. It is the rescue of of dollar-denominated paper as a world-wide medium of exchange. The world tolerates our trade deficit - and we can survive it - for one simple reason: the paper we give to get back the money we spend on the things we import is worth something. If our AAA paper is not reliably worth having, we won't get any of our money back to use to run our economy. So long as we need more credit than we, ourselves can provide through our savings institutions, our national creditworthiness - not just of the treasury, but of our blue-chip investment banks - is a national imperative.

Moreover, anyone who talks about "the American Taxpayer," when he means "the American-taxpayer-work... is an idiot. None of us is just a taxpayer.

There are people in this world who, if asked what they would want most in the world if they knew that an investment banker would get it double, would opt for one blind eye. And all of them are posting to blogs this week.