March 26, 2009

Feeling Shafted by Obama

So, we hear Nobel Prize winning economist Paul Krugman tell us Obama has gone with a "zombie idea" ... a bad idea that won't die. Yes. Obama has bought into the original Bush administration idea of having the government take the bad assets off the banks books, granted in slightly more confusing formula that nobody understands. This places most people in the position of hearing the government say "Trust us." Comforting, eh?

Not only is the Bush era idea a zombie, the approach is creating zombie financial institutions... institutions that should be allowed to die, but keep living. Now, I'm not saying the too-big-to fail institutions should simply be allowed to die. We need to harvest their functional organs in the process, the organs that support pensions, university endowments, and services to the real economy (not the phony financial house-of-cards economy).

I predict we will eventually get to this alternative solution, but not after a lot of the inside crowd are able to extract more wealth from the system at our expense. This sure-to-fail approach will also place us at risk of what the Japanese know as their "lost decade."

The sooner we push Obama to the solution of "harvest and let die" the better we all will be. That solution also has the benefit that, as the organs are harvested and spun off as smaller, independent firms, we will find ourselves in a future without the too-big-to-fail zombie financial monopolies stalking the earth.

Psssst... Do Something


Democracy Now, “The Zombie Ideas Have Won”–Paul Krugman on $1 Trillion Geithner Plan to Buy Toxic Bank Assets," March 23, 2009.


No comments: