VIDEO: A Bailout Alternative - BNN's Squeeze Play - Sept 26, 2008


For a couple of years financial Paul Reveres said the red ink is coming, yet Washington did nothing. Now Washington will try to inflate their way out of the problem and risk both capitalism (taxpayers take the risk of probable losses, but did not benefit from prior gains) and democracy (the modified “oversight” is too weak and virtually non-existant). The moral hazard is breathtaking. We are destroying capitalism and true democracy all in one blow.

We have to delever. Less debt (less leverage) benefits both stocks and bonds. Instead of risking taxpayer dollars to accomplish this, I advocate forced restructurings. Existing shareholders will be wiped out, and creditors will have to take a debt for equity swap.

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