governments should bail out companies, but management and shareholders
should be wiped out. We are doing this with Fannie and Freddie, even
Chrysler is paying back and I didn't think they would but I am
impressed, I didnt think we would get money from auots but the govt
made a decision about workers. In europe they are deciding if
countries are tbtf, the problem will always be with us. For that
reason you have reduce the propensity to fail, you have to make it so
the CEO and board (not same draconian of CEO) any institution that is
bailed out should leave CEO and spouse dead broke, board should give
back last 5 years of director fees. if you run an institution that
society coudl get hurt, you need strong incentives to proven failure.
reduce leverage in the system, it helps. Fannie and Freddie are too
big to figure out, which is ok we need to get it right.
CM - past panics and recessions start from wall st, they usually are
started by peopling making money with leverage and pushing bubbles,
this should have caused something like the 30s where we prevented it
from happening for a long time, but since we didn't you can expect it
sooner than you think, this is stupidity and it comes from academics,
econ and finance are not hard science, they should have gone into
snake charming
WB - is there anyone we didn't insult?
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