Radical Avenue

After two or three false starts, the US Treasury has finally come up with a plan for private investors to purchase toxic assets owned by troubled banks. We’re to believe that this new deal will then free up credit markets and get the economy rolling again.

How long will it take for our government to realize that throwing money at toxic assets won’t make them go away? The administration should announce more solutions that don’t cost taxpayers anything, like stringent enforcement of financial industry regulations.

No More Too Big To Fail
After the Great Depression, Congress enacted anti-trust laws to prevent the formation of monopolies because monopolies stifle fair competition. When monopolistic companies fail it can be catastrophic for the economy. But no one has been enforcing the anti-trust laws over the past thirty years or so, and unfortunately the results are predictable.

AIG has a monopoly on financial services insurance and banks around the world are completely dependent on this insurance, so now American taxpayers must keep AIG propped up indefinitely. Poorly performing companies should be allowed to fail. Capitalism in America requires it.

No More Bundled Mortgages
The risk of mortgage default depends on the creditworthiness of individual homeowners. Analyzing the viability of stock in a corporation involves an entirely different set of calculations. Bundled mortgages aren’t securities and shouldn’t be sold as that type of a commodity.

No More Credit Default Swaps
We keep hearing the line about how credit default swaps are so complicated that they can only be unraveled by the same Wall Street whiz kids that created them. Nonsense, credit default swaps are nothing more than dishonest transactions concocted by unscrupulous people in order to make a lot of money in a short period of time.

No More Bailouts
The US financial industry does not police itself well against fraud. To the contrary, it encourages malfeasance by rewarding risky behavior as long as the cash keeps flowing in. Now our government wants to pass the cost of Wall Street’s failures on to our grandchildren, with interest. No thanks.