There are no easy answers when facing a trillion-dollar hole in the banking system. Either the banks will fail, or money is going to have to be given to the banks to fill the hole, or the proverbial can will be kicked down the road with enough money being slowly injected into the system to keep it going. The first option is a nonstarter. This brings the essential choice down to writing a big check now to the banks or writing a lot of little checks over time, and bankers are not the most politically sympathetic recipients of federal largesse at the moment.
So there is a political incentive to create a focus on issues that are tangential to the trillion-dollar problem. Make sure that bankers sell their corporate jets! No more bonuses!
The sale of 50 corporate jets in today's market might fetch you $1 billion if you're lucky. End all the bonuses on Wall Street and you get real money--another $18 billion. Put the two together and a $1 trillion problem shrinks to a mere $981 billion one. The administration's hope was that such measures plus the group flogging of the CEOs of the big banks on the Hill last Wednesday would focus the media, Congress, and the public away from the fundamental enormity of the task at hand.
Thursday, February 19, 2009
Larry Lindsey in the February 23rd Weekly Standard: