Now that the bailout bill that was so delicately negotiated has failed, perhaps a one-sided bill (no, not the one-sided one that Paulson initially proposed!) has a chance. Because there is no middle ground in this bailout mess.
What you need is for the government to get warrants in the companies going bust and allow bankruptcy judges to reset mortgage rates. Sweden's example is instructive. That's exactly what the Europeans are now doing. Unfortunately, the Republicans are too blinded by ideology to accept this. The Democrats are too gutless to insist on it.
Meanwhile, Republicans talk about suspending mark-to-market rules. The only thing that will achieve is that banks to keep bad loans on their books indefinitely -- look at Japan for what will happen if we do that.
Democrats want to limit CEO pay. The effect of that piece of demagoguery is to deny failing firms access to new talent and to keep current management entrenched.
And Republicans want to cut capital gains taxes. As if anyone has any capital gains. Most everyone has capital losses. If you cut the tax rates, the effect will be to increase taxes because there is less offset against income. The last thing you want to do in a recession is to increase taxes.
Meanwhile, people are stuck in homes whose values have fallen. Expect labor mobility to decrease and unemployment to go up. It's already 6.1%. We are paying the price for electing people based on sound-bites, happy talk and affability instead of competence.
What you need is for the government to get warrants in the companies going bust and allow bankruptcy judges to reset mortgage rates. Sweden's example is instructive. That's exactly what the Europeans are now doing. Unfortunately, the Republicans are too blinded by ideology to accept this. The Democrats are too gutless to insist on it.
Meanwhile, Republicans talk about suspending mark-to-market rules. The only thing that will achieve is that banks to keep bad loans on their books indefinitely -- look at Japan for what will happen if we do that.
Democrats want to limit CEO pay. The effect of that piece of demagoguery is to deny failing firms access to new talent and to keep current management entrenched.
And Republicans want to cut capital gains taxes. As if anyone has any capital gains. Most everyone has capital losses. If you cut the tax rates, the effect will be to increase taxes because there is less offset against income. The last thing you want to do in a recession is to increase taxes.
Meanwhile, people are stuck in homes whose values have fallen. Expect labor mobility to decrease and unemployment to go up. It's already 6.1%. We are paying the price for electing people based on sound-bites, happy talk and affability instead of competence.
No comments:
Post a Comment