Should we buy assets whose value cannot be determined or should we buy preferred stock in troubled financial companies and let the companies and the market deal with the mess of assigning value? Both options are very difficult to implement. But if we were selective as to what companies we bought stock in, it would seem to me that we'd have a better chance at getting some of our money back a few years hence as some of these companies actually have good businesses beyond the arcana of the credit markets.
The complexity of our situation is becoming clearer every day. Yet, at some point soon we have to act. Sweden acted fast, Japan didn't when they were faced with financial system catastrophe. Sweden came out of their crisis much sooner than Japan largely because they were more demanding of the banks. It seems wiser to me to move quickly but not with all of our assets.
There are systemic changes that must be made. We need to regulate just about all financial markets of any size. We have to return to a day when people accepted reality and saved today's money rather than spend tomorrow's money today, a day when we invested in education, in science and technology, in infrastructure, a day when we were much less of a 'service' economy'.
Somehow we have to figure out a way to help those of our neighbors who, through no fault of their own, have found themselves in a rapidly deteriorating financial situation. Figuring out who these people are may require a Solomon. At the same time, we pray that our leaders can resist the blandishments of the lobbyists. And, most importantly, we have to put a fair value on the very complex securities that are at the heart of the problem.
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