How the U.S. Blew Trillion-Dollar Trade of Century: Mark Fisher
Bad deal by the Bush team?
Bloomberg….In a recent interview in the Financial Times, John Thain, Merrill Lynch & Co.’s former chief executive officer, gave an insider account of those dark days: “Once it became clear that Lehman wasn’t going to be rescued and was going to go bankrupt, the group then shifted its discussion to OK, well, how do we prevent this domino effect?”
Within this environment of impending doom, the government had no choice but to play Atlas and save the financial world. Unfortunately, it failed to realize that along with this role came a tremendous opportunity: to capitalize on the situation. In this sense, the government failed to make the trade that would have catapulted the taxpayer — rather than just the banks — back to stability.
Mitigated Animosity
The government had an opportunity to structure the following innovative investment solution: Uncle Sam could have demanded 25 percent to 30 percent of the underlying equity in the banks before agreeing to negotiate a bailout package with the weakened institutions. Had the government brokered a deal that tied bank earnings to taxpayer payback over time, the animosity between Wall Street and Main Street that exists today would have been eliminated, or mitigated at the very least.
I’m certainly not advocating government control of the banks; rather, just the opposite — the government would have taken a passive stake and then stepped aside to let business take care of business.
Unfortunately, our leaders in Washington lacked the shrewdness required to guarantee taxpayers a permanent ownership stake in the banks their money was being used to save. An innovative investment solution could have secured some of the necessary funds to fix our disaster of a health-care system or Social Security mishap….
John,
I posted this a few days ago. How in the world have you put this on Bush ?
The article said:
Obviously, no one in President Barack Obama’s administration has ever watched “The Godfather.”
The article said:
Obviously, Federal Reserve Chairman Ben Bernanke and his cronies have learned from the experience of the Great Depression how to repair what has been broken, but they have failed to understand how to capitalize on it.
DOR is going to have an emotional breakdown as the Bernanke doesn’t answer to the President.
Bottom line this could be better said as a shortcoming in government intervention.
We are going WAY beyond saving a meltdown.
Will you be blaming Bush if the economy backslides ?
Will you be thrilled when capitalism is cripled and replaced by a social democracy ?
John’s not happy if he can’t blame Bush, Palin, Rush or some other prominent GOPer.
Great post saltyd…I wait with bated breath for John’s response…haha.
Fisher’s article was from a capitalists view. Neither Bush (weak) nor Obama (devoid) would have sorted it out like that.
It would have required Bernanke to do so & Fisher pegged him dead on – he could repair it – we hope – but not benefit those pulling the bacon from the fire.
And the zombie’s keep on growing.
John’s response will be..well it started way back..He will never admit he is a Blue Dog Democrat leaning to social democracy.
saltyd,
Seriously, I don’t get all that emotional about monetary policy reporting lines.
What strikes me as funny about the Bloomberg report is that they actually believe that the political Neanderthals conceptualizing policy in the second half of 2008 were capable of even acknowledging the notion of nationalizing Lehman Bros, et al.
.
What is the point of debating what President Obama would have done months before he took office? I mean, its like asking what President Clinton would have done in response to the collapse of the Berlin Wall.