On “The Bailout”, Part 1

I haven’t blogged here or or commented elsewhere for the most part on “The Bailout”. Finance is a complex subject that I know somethings about, but not enough to just start typing suggestions.

I have been studying up and thinking about it. For better or worse, I am ready to comment now. I have been trying out my thoughts on friends face to face and on post notes to myself at work (though that may be a signal of insanity, NTITOI).

What is the goal of the bailout? The goal is to have bank lending at reasonable levels so that the wheels of American commerce can continue to spin.

Everything else is a lesser issue.

What are the negative goals?

-Don’t do a government take over
-Don’t do something socialistic
-Don’t fleece taxpayers
-Don’t Reward Bad actors

2 Responses

  1. President Truman, when the coal miners refused to mine coal, sent in the military to do so. The US government, in a time of crisis, properly responds to supplier-strikes by stepping into the market.

    I would rather see a temporary Bank of the United States, which is clearly under public control and thus clearly a political issue, than welfarized speculator organizations which can continue manipulating the markets while acting as if they are private organizations.

  2. “temporary” is the right word.

    There are ways to provide liquidity to the banks so they can lend without transferring all the mortgage risk to the USGOV.

    Nobody can accurately value those complex securities securities right, so any plan should avoid dealing with them.

    The goal is bank liquidity to keep commerce going, not clearing mortgage securities from bank balance sheets.

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