I have two offensives to report in the Battle Against the Bailout. First, here is an mp3 of my interview with Mark Carbonaro on Friday morning. And here is my op ed in the San Diego Union-Tribune that ran yesterday. An excerpt:
The government itself has made it rational for each bank to continue stringing along its investors. After all, why should an investment bank announce the full extent of its shoddy mortgage-backed assets before its competitors do so? For the past 13 months, the government has been announcing steadily more generous measures to resuscitate Wall Street. The largest holders of these toxic assets played a game of chicken, betting that they could survive long enough to get a massive bailout from the government. And last week, Treasury Secretary Henry Paulson rewarded their foot-dragging with the promise of hundreds of billions in taxpayer dollars.
The ban on short-selling is also counterproductive. First of all, speculators perform a vital service by signaling to the public which stocks are overvalued. The reason the “vultures” attacked Bear Stearns and Lehman Brothers was that these firms were heavily leveraged in dubious mortgage derivatives. Not even New York State Attorney General Andrew Cuomo – who is making a big fuss about market manipulation by short-sellers – would suggest that Exxon could have been brought to its knees by mere rumors.