strodeunplugged

It’s not just a television show, it’s our Government at “work”.   What as recently as this afternoon appeared to be a very quick (in Governmental terms) decision on the Government investment in mortgage related assets has come off the rails for what appears (to me) to be an amazing amount of political positioning, even by Washington standards.

Tonight, the following headline stories all sit in a row on WallStreetJournal.com:

• Regulators seize WAMU in biggest bank failure in US history
• Short term money markets in turmoil heightening the likelihood of long term harm to the economy
• Government deal in flux after meetings
• Orders for houses and durable goods fall to lowest level in over a decade
• Jobless claims rose again (glad to participate)

I’m not an expert but I know enough and can read enough research to know something needs to be done.  I think it’s a secondary exercise to get to the root cause and put in corrective measures for future governance.

Despite that, looks like we’ll take some more timeouts so politicians from both parties can posture.

I think (could be wrong – there’s definitely information overload in the media on the topic) that most experts agree there is a problem in the credit markets.  There is clearly disagreement over the best way to respond.  Basic rules of business are like medical triage; in a crisis you prioritize and address the things that will “kill you” (figuratively) and let those that won’t wait.

Prolonged lack of credit may not “kill” the economy but it will certainly lead to a long(er) road to recovery.  Banks have largely stopped lending, even to each other.  WAMU’s failure, without the structured resale to Chase, could have been truly frightening.

“Federal regulators had been trying to broker a deal for Washington Mutual because a takeover by the F.D.I.C. would have dealt a crushing blow to the federal government’s deposit insurance fund. The fund, which stood at $45.2 billion at the end of June, has been severely depleted after suffering a debilitating loss from the sudden collapse of IndyMac Bank. Analysts say that a failure of Washington Mutual would cost the fund upward of $20 billion or $30 billion.”

Bad enough to wonder whether or not Social Security will be solvent when you reach retirement age but things have really gone round the bend when you have to wonder about the viability of FDIC insurance.

I’m admittedly biased towards business people as opposed to politicians but another good rule of business is to surround yourself with people smarter than yourself and then let them do their jobs.  I don’t really care whether Henry Paulson or Ben Bernanke is a Republican or a Democrat, I’m willing to bet they know more about what’s best for the economy and the financial system than your average Senator or Congressman.

In this case, I’m perfectly comfortable betting with my tax dollars.  I’ll pull them out of my mattress on April 15th.