Dedicated to the writings of Saint Luke.

Sunday, October 05, 2008

Gather in the rich and haughty

I am wondering if the turmoil of the last several weeks impacted those who made so much money assembling those toxic packages. I suspect that, if prior economic disasters provide any guidance, 50% of the financial service entities and 50% of their employees will disappear from this sector. The economic impact will be profound not only upon the rich and haughty but also the main streets of the communities around the world including too small to have their own post office.

The size of the renamed rescue package is miniscule compared to the magnitude of the toxic packages that need to be removed from the banking system to provide relief. It may be easier to follow the doctor’s advice to take two aspirins and call in the morning but morning may be months and years away.

One bank in the Philadelphia market is running full page newspaper ads reminding people that they did not make subprime mortgage loans nor did they abandon fundamental banking practices. Only when banks and individuals become responsible will we see relief.

Meanwhile I have several recommendations: 1) we should adopt the philosophy that larger is not better as we downsize the too big to fail mindset; 2) we voters of the blue and red states should equate the rich and haughty with the incumbents not because they voted for or against the bailout package but because they failed to exercise their legislative oversight function. They failed us miserably.

Fannie Mae and Freddie Mac, to name only two, failed on their shift. The incumbents should share in the unemployment woes of the financial service sector. Our votes should not reward incumbents who slept on the job. This way we can be part of the solution.

Copyrighted 2008


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