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Forget the Exec Pay: Focus on What We’ll Pay!

A bit of sensible thinking on the bailout proposals for Wall Street from David Leonhardt at the New York Times.  The bottom line is that the $700bn we’re sinking into Wall Street’s bad debts doesn’t have to be nearly that much at the end of this process: the question is what price we buy the bad debt at and how quickly we can recoup loss.  Check out the article:

Economic Scene – Issue Is Payback, Not Bailout – NYTimes.com

The efforts to punish executives and help Main Street are based on a worthy instinct — to address not just the crisis but also larger problems like inequality. The best way to solve those problems, though, is to make sure the government spends as little possible on an effective bailout.

A few hundred billion dollars saved today will leave a few hundred billion tomorrow to spend on a better health care system, a saner energy policy and a healthier economy.

Trust me, I’m under no illusions that we’re going to be making money off this deal.  But the question in the end is how much we lose on it, and that’s what Congress needs to focus on.  That means figuring out at what value bad debts will be priced before we buy them and what oversight is in place to make sure things are working the way we expected them to.  Restoring our financial breakwalls removed by Republicans is a good idea, too, but only after these issues are worked out.

By Tommy Belknap

Owner, developer, editor of DragonFlyEye.Net, Tom Belknap is also a freelance journalist for The 585 lifestyle magazine. He lives in the Rochester area with his wife and son.