Tuesday, September 23, 2008
Fix the problem, not the blame
OK, it's time to stop playing the blame game for the financial mess, as there is plenty to go around. Republicans and Democrats both voted for legislation that loosened regulations on selling of credit default swaps, Democrats pushed legislation that pressured banks to make more sub prime loans and blocked legislation that would have prevented Fannie and Freddie from running amok. Dodd, Frank, and Gramm all played roles in the creation of this problem. The important point now is how to fix it before the entire financial system collapses. Paulson's plan to buy up bad debt, to clean up the balance sheets of banks is a good start. The democrats are wrong to insist on getting stock in the banks that get help. If banks are forced to give up stock equal to the assets they sell, they are in effect being asked to give away the assets, and are unlikely to participate in such a scheme. No help be given to hedge funds, who are far more guilty of causing the mess than being victims. In addition to cleaning up the balance sheets of the banks, Congress should lower the capital gains tax to zero to spur an influx of capital. The time to act is now.
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What a great idea...let's not think about how we got into economic trouble, let's just give more money to those who created the problem...I'm sure they'll fix it.
It's not a big surprise that Republicans suddenly don't want to "play the blame game" since de-regulation of financial markets has been a key part of their platform and although some Democrats have gone along, by far the largest supporters and implementers of de-regulation have been Republican NeoCons.
Perhaps Democrats might be less inclined to "play the blame game" if NeoCons showed any indication that they'd learned from this and might behave more responsibly in the future...unfortunately, all we see is deeper retrenchment into voodoo economics: let's cut taxes further (especially capital gains taxes for the wealthy) and simultaneously spend trillions more dollars...that'll fix the economy.
Perhaps letting irresponsible lenders fail, imposing reasonable regulation on critical financial markets, restoring sane corporate governance, and paying down the national debt *is* the solution...maybe we should cut dividend taxes that encourage healthy companies that actually turn a profit instead of cutting capital gains taxes that reward speculation without adding value...or maybe we should just keep running up the debt as fast as we can; after all, look how well that's been working!
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