Fear of Clowns

"Faith may be defined briefly as an illogical belief in the occurrence of the improbable."
- H. L. Mencken
gozz@gozz.com

Monday, September 15, 2008

Two from the NYT 

An "editorial" from some old guy in Boca Raton that makes sense what we're read about the sub-prime crisis, bail-out of Bear Stearns and the past three days' whirlwind. Sort of like a Cliff Notes of 6 months of financial headlines.

And from the editorial board (which at some point in the recent past applauded deregulation of the financial industry, I'm sure),

As long as foreclosures continue, housing prices will continue to decline and banks and other financial firms will continue to suffer losses. Continuing losses, in turn, could force more taxpayer bailouts, by reigniting fears that ongoing failures may threaten the entire financial system. Preventing foreclosures is the key to stanching the crisis, but policy makers have been unconscionably slow to address that aspect of the crisis.

It will require political will, but is not too late to try to decrease foreclosures by allowing homeowners to restructure their unaffordable mortgages in bankruptcy court. It is also not too late to stimulate the economy with intelligent government support, like aid to state and local governments, rather than campaign-year gestures like the tax rebates for virtually everyone that dominated the first stimulus package.

And it is certainly not too soon to look beyond the current crisis to the flaws and fallacies of the anti-regulatory ideology that has held Washington in its grip since the Reagan years and allowed the financial excesses that are now stressing the system to the breaking point.

Making and enforcing new rules is necessary, but that will not be enough. The nation needs a new perspective on the markets, one that acknowledges the self-destructive bent of unfettered capitalism and its ability, unchecked, to wreak havoc far beyond Wall Street.

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