Friday, December 19, 2008

The perfect solution to the economic crisis

Simply pay the people who got us into this mess with all these funny money investments their bonuses and all with those same funny money investments! Moves it off the bank's books, frees up their cash so they don't need our bailouts and puts the problems back on the people who caused it. And don't forget, we should collect income taxes on it as well - after all, if Wall St Whiz Kid has "earned" a $22 million bonus this year, taxes are just a part of life.

Credit Suisse is doing it - they just don't go as far as I would.

We're shocked that nobody has suggested this before, but on its face this looks like a great idea... Credit Suisse announced today that bonuses for its top executives would be made in illiquid, mortgage-backed securities. Seeing as these guys are responsible for getting this stuff on the companies books, it makes sense to shove it back to them. And if the market gets liquid again, and the stuff goes up, that's going to be a huge windfall for execs:

Bloomberg: The bank will use leveraged loans and commercial mortgage- backed debt, some of the securities blamed for generating the worst financial crisis since the Great Depression, to fund executive compensation packages, people familiar with the matter said. The new policy applies only to managing directors and directors, the two most senior ranks at the Zurich-based company, according to a memo sent to employees today.

“While the solution we have come up with may not be ideal for everyone, we believe it strikes the appropriate balance among the interests of our employees, shareholders and regulators and helps position us well for 2009,” Chief Executive Officer Brady Dougan and Paul Calello, CEO of the investment bank, said in the memo.

Another bonus: This moves the stuff off of Credit Suisse's books, while letting it hold onto its precious cash. Will we see any copycats?

Friday, December 12, 2008

"I believe that banking institutions are more dangerous to our liberties than standing armies

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
-- Thomas Jefferson -- The Debate Over The Recharter Of The Bank Bill, (1809)