Sunday, September 28, 2008

Evolving Thoughts on Financial Crisis

As a capitalist I have been very conflicted about this bailout. These financial institutions made bad financial decisions so they should fail.

However the number of companies facing failure all at once may be too much for the economy to handle. We could be facing a major long term recession or even depression if they fail. I do not know for sure but we can not afford to take the risk. So I reluctantly will agree that the government needs to take some action.

What should they do? Well I am leery of Paulson’s plan because he is from Wall Street. I think that colors his view of what should be done. He thinks Wall Street is the be all and end all and I think he shares Wall Streets tendency to overreact to Wall Streets problems. (really Wall Street has over-reacted and that is part of the problem).

So I am not ready to roll over and agree to whatever he wants. I hope the package it gives the taxpayers the ability to make their money back. I do agree that if we are bailing these companies out there management should forget about golden parachutes.
It will be interesting to see what the deal finally looks like.

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