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.

My Proposal for Improving Lending Between Banks

It's all deck chairs until we steer the S.S. Oil Junkie away from the iceberg. We have a trade deficit; in other words, they send us stuff and we send them paper. When we ran out of good paper, we put lipstick on bad paper (aka subprime mortgages), and sent them that. Now the jig is up. Even if we solve the liquidity/credit crisis, we won't be able to borrow our petrodollars back because now the world knows that we have nothing to borrow against. So they won't take dollars, and we can kiss the good life good bye.

Nuclear energy, CNG, coal, wind, solar, etc. We need to use local energy sources to run our stuff, and we need to SELL our oil to pay for our toys.

Go back to econ 101 and study comparative advantage. In this day and age, any country that can produce oil ipso facto has a comparative advantage in oil and should export oil. Until recently, our comparative advantage was in investment grade paper - something we could produce more cheaply than just about anyone else. Now, that advantage is gone. We need to export something else, and oil is it. All we need is the brains and courage in Washington. Which is why I've loaded up on SDS and TWM.

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.