With the bailout/rescue plan “sealed”, this is what I think I know:
1. Everyone blames someone else for allowing the situation to get to this point.
2. Everyone regrets that we’re in this situation.
3. Something had to be done now — or it didn’t.
4. It will work — or it won’t.
I have no insight to provide regarding the current situation, however, when has that stopped me before? Here are three ideas that struck me while walking along a Maine coast beach this morning (right before getting ready to head back to Nashville):
Idea 1: The Economic Stabilization Plan Wiki:
I think a group of economists and bright students should set up a wiki that will capture and record the flood of hopeful and dire predictions flowing forth from major economists, advocacy organizations, political groups, high-profile pundits (including finance bloggers) and media sources. This group of economists and students should then track the plan as it is implemented outside of the glow of current media coverage. After establishing the benchmarks of what “the experts” have predicted, the wiki should then become the repository of the following: What is purchased, how the money is loaned or spent, how the loans are packaged and sold, what is the return on investment. Where the graft happens. What is wasted.
At some point, in two, five or ten years, it should then publish a report card of who was right and who was wrong among the experts who are claiming now to be all knowing. It should also report: How much did this plan really cost us? Trillions? (I’ve heard amounts equal to many times the annual GDP) or was there a huge windfall return for taxpayers on investment that will reduce the national debt or save Social Security? (I’ve heard both predicted in the past few days.)
I’m sure there will be a “National Commission on What Went Wrong” appointed. What I’m talking about is what is going to happen, rather than what someone (other than me) allowed to happen this time.
Idea 2: The “Too Big to Fail List”: In addition to the “National Commission on What Went Wrong,” I think there should be a “National Commission on Companies too Big to Fail.” If we are going to live in a land that claims to have free markets except for when — for whatever reason (that is someone else’s fault) — there are companies that need to play the “we’re too big to fail” card in order seek loans or other bailouts from the government, then we need to go ahead and set up a “pre-commission” on the topic.
I think if this commission determines a company is too big to fail — say, hypothetically, Wal-mart is determined to be too big to fail because it employs 2 million Americans — then such a company should be required to choose whether or not to opt into the “we’re too big to fail” category of companies. If the company opts in, it would be required to hold certain cash reserves and be subjected to a higher degree of fiscal transparency than most publicly traded companies. During good times, these too big to fail companies would also be required to pay into the Too Big to Fail Trust Fund. When bad times happen, only companies who have opted in can apply for a Too Big to Fail government bailout. If you’re too big to fail and haven’t paid into the Too Big to Fail Trust Fund, too bad.
Idea 3: Read this Brad Stone essay in yesterday’s New York Times on why we think it’s okay some people get rich (entrepreneurs and Tiger Woods, for example) while we think it’s crazy that others do (investment bankers and former Presidents, for example). Great article.