Restoring the Principle

Unbailouts, Now.

The process will have use of bright Finance professionals that truly know their stuff and not smooth sailors on Government Manufacture. They would quantify value of the institutions, pools, liens to be acquired - using probability distribution projections around eventual defaults on the underwater mortgages v/s their successful redo, home price index trends, and so on.

The Bailouts, at once, violated the foremost principle of Capitalism, both Popular and Classical versions: That there be no socialization of what you lost for yourself, if all of your achievement and wealth be deemed of your own talent alone, and if Taxation mandated to stay low and even effectively regressive rates sometimes overlooked.

I argue in my previous post that letting the Finance industry just go bust was not the same thing as letting all of the .coms 1.0 go into liquidation. And that a cleanup under the receivership of Government was perhaps infeasible in the face of escalating socialism angst, one that persists to this day.

But garage sales to new, private owners that have the confidence to bid for, buy, and manage the assets better is neither bailout nor letting bust. New Financial Institutions, with fresh Capital, could acquire the failing old ones for what the old ones are worth (like ING acquired Barings for $1 after a certain Nick Leeson wrecked it with derivatives), or acquire the mortgage pools that have nothing like the value they are being held at on the balance sheets, or acquire the individual liens that are underwater.

Withdrawal of props and encouragement of garage sale of defunct financial institutions is the necessary germ to get back onto the path of individual and organizational merit, and honestly collecting the result of one's own gambles.

The process will have use of bright Finance professionals that truly know their stuff and not smooth sailors on Government Manufacture. They would quantify value of the institutions, pools, liens to be acquired - using probability distribution projections around eventual defaults on the underwater mortgages v/s their successful redo, home price index trends, and so on - and create a bid strategy for buying the target companies or assets in a calculated-risk in quest for returns.

Bottlenecks in Private markets, whether for homes, stocks, or MBSs, can only be cleared via some Capitalist-buyout juices flowing in the lurch for killer profits.