Pre$ident Obama = President George W. Bu$h Part Too
When the stock market crashed in 2008, I was quite skeptical of the then current President’s efforts to do anything useful about it. The point man was Paulson: a past CEO of GS. Surely, if there is one who understood CDO’s and CDS’ and credit markets, it is the past CEO of the premier ‘Wall Street’ firm. It was famously reported that even the ‘Sage of Omaha’ did not understand CDS, and passed on the deal. If there is one person on the face of this planet who could have explained it coherently, it surely was Paulson or Corazine.
Yet, the efforts of Paulson & Co, IMHO, was not unlike an old Keystone Kops reel. Did they really have any idea of what they were doing? Answer: usually not.
The current team: Summers, Volker, and Geithner. Forgive me for doubting that the intellectual horsepower of the current team is a notch or two below the team that they replaced (sigh…).
OK, big mouth: what would YOU do?
So, here, permit a Monday-Morning-Arm-Chair-Quarterback to give you a couple of ideas just to get you started:
1) S&P, MOODYS, FINRA, SEC, CEB ALL NEED TO DISAPPEAR. Investors and the markets need a single, comprehensive source of reliable, unimpeachable of information. This should also be the referee and law enforcer. No more politics, turf wars, or customer-desired influences. We need a resource where we will be glared at by a dude with green eye shades, wrinkles, a deep frown, a bald and graying pate, who will pierce through us with laser-eyes when we ask a question as to whether a “new” financial practice is permissible.
2) OWNING A HOME IS NO LONGER THE AMERICAN DREAM OR A RIGHT FOR LAW-ABIDING CITIZENS. Do you wish to buy a home and fulfill the great American dream? OK: have enough dough to put down a 20% down payment, and have a golden credit rating-simple, but not easy. You will need to work hard, be successful, and save a whole lota cash to buy a home. This is your goal to work towards. You do not deserve to buy and own a home and a half acre of property just because you are honest, a nice person, and need space to raise your children.
3) FNM, FRE, FHA, GNMA NEED TO DISAPPEAR. There is no earthly reason why taxpayer dollars should be squandered to financially help a small % of beneficiaries to buy a home. Want to buy a home? Make Lots of $$$!!!!, and you ain’t gonna git a taxpayer-financed discount on your home purchase transaction.
4) CREDIT DEFAULT SWAPS NEED TO DISAPPEAR. If you are one of the 2 main parties to a financial transaction that involves debt and a promise to pay, CDS makes sense. It does NOT make sense to make a bet on the transaction, just because you wish to make a bet as to who or whom will default.
5) HEDGE FUNDS AND LEVERAGE NEED TO DISAPPEAR. These are merely classy, high-falutin’ ways to gamble on equity markets, not unlike putting down your 401K on a single roll of the dice, and then come crying to gov’t, taxpayers, and lobbyists that you have been cheated and need preferential treatment.
I would rather that the top 100 CAPS players run our financial system than the current team of financial ‘experts’ drafted by the current administration.