On My Watch

Monday, June 08, 2009

Got to be a better way

Last night finished Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse by Thomas E Woods.

Is Deflation OK? Woods says it is but my text books say no. Otherwise, some of prescription sounds pretty darn good, particularly, as a techie and modernizer, the first:
  • Let Them Go Bankrupt - 'What's special about banks?" Can't we find other ways to connect depositors and borrowers without propping up the losers? Banks are intermediaries. Doesn't technology make this process easier and easier - including proper regulation - and lower the costs? I am not a banker and sure they'll be pain but there already is (to the tune of $billions) and can't us (we?) technologists build the connections and controls.
  • Abolish Fannie And Freddie - What are they even doing now?
  • Stop the Bailouts - How can more debt solve the problem of too much debt? Or at least "Where's mine?"
  • End gov manipulation of Money - not sure about this one. Again, is deflation OK and time to go back to the gold standard? Above my pay grade for sure.
  • Put the Fed on The Table - As far as what I can tell, Fed is probably one of the most rational and least political institution now but it is hardly ever mentioned as part of the problem. Certainly better than the over leveraged banks, regulators (particularly Office of Thrift Supervision), Congress, dead beat borrowers and activists pushing for loans to people who can't pay but didn't easy credit get us into this fix? (Actually I don't really fault the banks too much (some of my best friends are bankers - some even design financial products) - they just operate in the environment the govt created but take a look at some of those complex loan contacts used for ARM's - yikes)
  • Close Those Special Lending Windows - Again don't really understand the detailed pros and cons but do the Term Auction facilities hurt or help?
  • End the Monopoly Money - Back to the gold standard? Let me check my gold chain inventory....
I''ll get off my soap box now - but there has got to be a better way than flushing billions/trillions away - a billion here and billion there.... Guess I need to read Von Mises next.

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