Thursday, September 25, 2008

Citizens' Welfare Preferable to Bankers'

Contrairimairi sent me an e-mail from TJ Birkheimer, part of which is copied below. Here's an alternative idea along the same lines as Birkheimer's. Rather than bail out failing banks and insurance companies, combine and liquidate them, spinning off the non-performing mortgages and going after all current and former officers for restitution.

Break the financial institutions' assets up into 250 parts, producing 250 smaller banks and insurance companies. Choose the CEOs of the new banks and insurance companies randomly from the Yahoo! people search page. Subsidize the 250 new banks to the degree necessary to make them solvent. Use the remainder of the $750 billion bailout money to provide unemployment insurance to any employees who lose their jobs and need to be on the dole.

This plan would have several advantages. First, by hiring new CEOs out of the phone book, more competent management would be obtained than through the firms' HR systems.

Second, instead of a few large firms that are too difficult for their present managers to run, there will be 250 smaller, more nimble firms with better leadership.

Third, rather than subsidize mismanaged businesses, citizens' welfare would be directly protected.

In addition, the public might consider whether commercial banking ought to be phased out and replaced by Savings & Loan (non-fractional reserve) style banking. The public ought to look at the root cause of this problem, the Federal Reserve Bank, and abolish it in place of a gold standard.

Progressivism is so dominant that public discussion about nonsensical cries of "depression" and "crisis" proceeds on silly assumptions.

Here is an excerpt from Birkenmeier's e-mail:

>Hi Pals,
I'm against the $85,000,000,000.00 bailout of AIG.
Instead, I'm in favor of giving $85,000,000,000 to America in a "We Deserve It Dividend".
As for AIG - liquidate it.
Sell off its parts.
Let American General go back to being American General.
Sell off the real estate.
Let the private sector bargain hunters cut it up and clean it up.

T. J. Birkenmeier, A Creative Guy & Citizen of the Republic


Doodad said...


Did Contrairimairi or TJ Birkheimer do the math? The email I received suggests $85 billion be shared among 200,000,000 people resulting in a gross windfall of
$425,000 Now, I don't have a PhD, but my third-grade teacher would harshly admonish anyone with such poor math skills. 85 billion divided by 200 million equals 425, not 425,000 as the the whack-job TJ would suggest. Liberals always try to find something for nothing.

Mitchell Langbert said...

Yes--I edited out part of it. The math is wrong, no doubt. I think it was just supposed to be a joke. The intuition is right, though.