Tuesday, October 21, 2008


Anna Schwartz, in an interview published in the WSJ October 18, got me thinking...

What say we take what's left of that $700 bn and dream up some kind of incentive to get an exchange set up to transparently price the structured OTC inventory (or at least its major parts) ASAP?

All assets that impact statutory capital have to be priced without any further delay (wasn't that the spirit of FASB 157?).

Then let the market do its thing. It's going to anyway, eventually. The sooner, the better.

Instead of bailing out the banks which were rather poor stewards of the money they had, why not invest in the market infrastructure? Some of the bright lights at the NYMEΧ, for example, are making some headway. If a deal can be struck, then take a position in the solution instead of the cause of the problem.

If the government has to be involved, let it be in a way that upholds markets, not supercedes them.

You'll probably still have to bail out the banks, but at least the problem will be on its way to being solved. And getting an exchange working properly will very likely speed the process and reduce its cost to taxpayers. Oh, and it will create value and wealth in the process.

The market will fix the problem if it has the tools.

Wouldn't it be cool if America leveraged this situation into a leadership position in these new markets, like it had once in equities, options and futures?


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