“You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”  —  Abraham Lincoln

I never intended to use this quote twice in the same year, especially since I have yet to write all that much, but the recent events, including the current debate among congressional democrats and republicans around the multi-hundred billion dollar bailout brings it right back to the forefront of my mind.

Among the concerns the democrats have today are how executive compensation and home ownership will be affected by the Bush administrations plan to pump massive amounts of liquidity into the system.   While the bailout is arguably a good idea, it’s not the master plan we need to worry about, but the line items that get attached to it while we are all distracted by the puff of smoke on stage left.

The advantage to having a guy like Hank Paulson in the room is that the Fed and taxpayers are unlikely to come out of this mess as complete losers.  The disadvantage of having a guy like Hank in the room is that the same hubris that ran Wall Street over the last decade is working to use the current crisis as a smoke cloud to obfuscate Main Street’s understanding of the details of the bailout.

Much like the regrettable overarching powers entrusted to the Bush Administration in the wake of 9/11, there is and should be a real concern that the same people who brought you unrestrained wire-tapping, and torture are likely to bring you the financial equivalents of the two.

These two items are emblematic of the current financial crisis is helpful to understand that it is in moments like these, when the flash-bang has been thrown, that we must work extra hard and extra fast to make sure we regain our sight and our hearing.

I know some folks believe and will be pontificating that the Democrats work to socialize the bailout plan might lead to delays that could force the massive unwind in markets that we are all fearful of.  While it is true that delays at this moment may be a slippery slope, that is NO reason for us to spam the legislation with ancillary powers that benefit corporate executives and may further harm hard working Americans.  I’d sooner want to see a shut down of markets while the Fed hammers out an urgent, but less reactive solution.

While it is nearly improbable that we could all be fooled all of the time, this will prove to be the second instance in eight years that we CAN all be fooled some of the time.  We need to be vocal to all of our leaders, government, civic, and social, to ensure that this bailout is at most slim and flexible in a way that will offer time to staple on terms that make sense for ALL Americans.  There has not been enough time to decide anything more than that something needs to be done.  To give H. Paulson & Co. sweeping powers at this moment in time would be nothing more than slight of hand and a mistake of grave consequence.

As I noted in an earlier post, there are a number of rumblings that a quicker, easier and less expensive solution would be to work with FASB to change accounting standards on the types of assets current in question.

If, given the hand the fed is holding, they believe that a trillion dollar bailout is absolutely necessary, then at the very least we need to be very careful of what powers they are granted by this new legislation born by fear.

This is not the time to throw caution to the wind.  If we learned anything from 9/11, when we are a fearful, we are vulnerable.

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