Tuesday, September 23, 2008

Throwing Good Money to Bad Money Managers

You know the wags who sip vodka-tonics out of martini glasses to make it look like they drink martinis. The ones who say things like "You gotta have a diversified portfolio."
The truth is, an economy has "gotta" have a diversified set of economic theories. If you adhere to just one idea in a complex multi-structured economy, you are in the same situation as the guy investing only in soy. A free market is great, as long as "free" doesn't mean "unbridled atavistic greed and ignorance of actual market conditions."
So, the University of Chicago School of Neoconomics Science Fair (Milton Friedman, instructor) has played itself out with disastrous results for the rest of us. They proved -- yes, proved -- that capitalism fails miserably when it's based on a blind devotion to and naive insistence on a completely unregulated free market and dependence on disasters to create conditions for the vultures to get whatever they want.
Rather than work for it.
So, rather than go on about my plan, I'll let you peruse Dennis Kucinich's. Which seems like a swell idea, but just like his impeachment call, is too good for the rest of Congress to consider. But you, shipmates, are much brighter than they. Particularly the blackmailers who are saying we have to give Wall Street a bazillion dollars or things will get even worse.
I recognize the distinguished gentleman from Ohio, who states:

In the next few days I will push for a plan that includes equity for every American in any taxpayer investment in this so-called bail-out plan. Since the bailout will cost each and every American about $2,300, I have proposed the creation of a United States Mutual Trust Fund, which will take control of $700 billion in stock assets, convert those assets to shares,and distribute $2,300 worth of shares to new individual savings accounts in the name of each and every American.I will also insist that all of the following issues be considered in whatever Congress passes:
  1. Reinstatement of the provisions of Glass-Steagall, which forbade speculation,
  2. Re-regulation of the finance, insurance, and real estate industries
  3. Accountability on the part of those who took the companies down:
    a) resignations of management
    b) givebacks of executive compensation packages
    c) limitations on executive compensation
    d) admission by CEO's of what went wrong and how, prior to any government bailout
  4. Demands for transparency
    a) with respect to analyzing the transactions which took the companies down
    b)with respect to Treasury's dealings with the companies pre- and post-bailout
  5. An equity position for the taxpayers
    a) some form of ownership of assets
  6. Some credible formula for evaluating the price of theassets that the government is buying.
  7. A sunset clause on the legislation
  8. Full public disclosure by members of Congress of assets held, with possible conflicts put in blind trust.
  9. A ban on political campaign contributions from officers of corporations receiving bailouts
  10. A requirement that 2008 cycle candidates return political contributions to officers and representatives of corporations receiving bailouts

  11. And, most importantly,some mechanism for direct assistance to homeowners saddled with unreasonable or unmanageable mortgages, as well as protection for renters who have lived up to their obligation but fall victim to financial tragedy when the property they live in undergoes foreclosure.

But just to be extra safe, I'm following the lead of my Swamp Yankee forbears. Just to hedge (if you'll pardon the expression) my bets.

    2 comments:

    bitterandrew said...

    Just be careful that the skunks don't unearth your stash and use it to go on a bourbon-fueled skunky bender...

    ThirdMate said...

    We have a deal. When things really get rolling, the skunks get the empties.