The more I read about the proposed Wall Street bailouts the more I want to sick up. We have a process in this country for dealing with companies that can't meet their obligations, its called bankruptcy.
There's more inside.
I had the opportunity as a young man to watch a fast change artist at work up close at the cash register of a long gone pizza joint. He was truly a marvel of fancy patter, misdirection, and lightening quick movements. I was standing elbow to elbow with him at the cash register and I had no idea what was going on until it was over. The thing that brought things to an abrupt end was the owner closing the till of the cash register with one hand and placing his open hand down firmly on top of the cash in question on the counter. In the blink of an eye the con man was out the door at a dead run without a cent to show for it.
Fast forward ~ 40 years and I am seeing the same kind of a con being worked on Congress and the American tax payers who have to foot the bill for their mistakes.
As I understand it, a large number of Investment Banks have got a problem. They own a bunch of worthless or at least impossible to value investments. The also own a bunch of perfectly good investments. So the proposition on the table is that "We The People" help them out. The proposals vary, but the meat of the matter is that we give them cash and we get their worthless paper. I don't care how you dress it up this deal stinks.
So what is Congress doing? They are trying to make the deal smell better by adding over-site and maybe loan renegotiation for homeowners that are in over their heads and they will keep adding shiny things to the package to make it smell better. Laudable as this sounds it can't be done. If Congress wants to pass legislation that keeps homeowners in their homes I am all for it. Just grow a pair and do it.
I happen to own a wide variety of stocks and bonds, this hasn't been a great year for my investments, but the sky has not and is not falling. If my Investment Bank goes under (N.B. by shear dumb luck my brokerage happens to be in pretty good shape) my stocks are still safe they will just be moved to another transfer agent. I understand all about the "interlocking nature of the banking relationships and how if one fails they all fail" I say horse hockey. The stocks of these companies may become worthless, There may be a temporary lack of liquidity while the mess gets sorted out, and there will definitely be a lot of pissed off stock holders, but the underlying value of assets held by these firms isn't changed. Value is value and crap is crap.
If Congress wants to make the bankruptcy process of these failed companies more orderly there are any number of ways to do so that don't cost tax payers a dime.
If Congress wants to do something constructive right now they can repeal the deregulation legislation that got us into this mess.
After the dust has settled Congress can take stock and write new legislation that deals with the complexities of a 21st century financial system, but that is for later.
There really is no rush, you can't fix the unfix-able.
I don't have all or maybe any of the answers, but I know a fast change job when I see it.