[quote=patientrenter][quote=davelj]…My issue as a taxpayer and bank customer is that I want the least costly resolution to these huge problem banks…[/quote]
DaveLJ, for some of us, fairness is one of the most important goals of any resolution of this mess. I would prefer a very fair $15 trillion solution to an unfair $10 trillion solution. I’d prefer a solution that costs $5 trillion dollars more and administers lots more pain to the people who bought assets or goodies liberally on borrowed money or who assisted professionally in reckless lending, and delivers much less pain to the people who were restrained and refused to try to ride leverage to riches.
Otherwise, what’s the point in exercising self-restraint and good sense in the future? It just makes you a loser, an easy mark.[/quote]
PR, what you’re saying is that you’d rather cut off your nose to spite your face. Which is fine, but obviously I don’t share that view.
I’d like to see fairness and pain as well. After all, I loves me some schadenfreude. But how much pain is enough? Greenberg, Lewis, and most of these other former financial titans have probably seen their net worths dive by 80%-90% in this crisis. Granted, that’s down from very large numbers to begin with. But you’re not going to get EVERYTHING from them. It’s not going to happen. Most of these folks’ lifestyles will not be dramatically affected even if their companies go BK. You may not be happy to hear that, but it’s reality.
And the small speculators? They’re mostly dead or dying at this point. Done. And the folks that just bought too much house and are underwater? Even if they end up getting some “help” in the form of loan mods, that just brings them back from the brink. My point is that I don’t believe moral hazard is much of an issue at this point. Most of the folks that did the really dumb things are either wiped out or have seen a good 80%+ of their net worths wiped out. The pain has been deep and wide. Folks are scared. Which is a good thing. A necessary thing. Where we differ is that you apparently believe that we need to have Great Depression II – with all that entails – in order to properly punish the evil doers. I don’t. I’m not one to cut off my nose to spite my face.
