Here's this week's worst idea/trial balloon from the Obama administration: Convert the government's bailout loans to banks into common stock, making Uncle Sam not just the regulator of banks but their owner. So that the country's largest banks could become public-private corporations, like Fannie Mae and Freddie Mac, and just as capable of creating the next big boom. Which would soon enough trigger the next and even bigger bust. Will we never learn?
The New Deal never made that mistake. FDR saved the banking system by insuring and reconstructing it; he didn't seize it. No wonder our new president has already noticed a "confidence gap" in his administration.
Some enterprises have earned failure. Let them have it. That's what we have Chapter 11 and bankruptcy courts for: to save the assets, pay off the creditors, reorganize those parts of the enterprise worth reorganizing, and get on with business.
I myself hear from a bankruptcy court regularly, the one supervising the Tribune Company's crack-up. I'm a bona fide creditor now, if on a tiny scale, because its syndicate handles my column. But I notice its checks still cash. It's only bankruptcy, not the end of the world.
I've known some cock-eyed optimists who can see nothing but the bright side of things. But at times like these, it occurs that some folks can become intoxicated with pessimism, too. And it makes them advocate precisely the wrong policies.
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