Saturday, October 11, 2008
The answer is to:
1) Repeal at least half, or all of Sarbanes-Oxley, especially related to market value write downs. Make it instead an average market price over some time. This will fix about 65% of the problem and also put our US companies on a level playing field with the rest of the world. You wonder why so many companies are leaving the US! The cost of compliance with Sarbanes-Oxley is estimated at $5 Million per fortune 500 company per year, and it is limiting the number of new IPOs in the US market to only a handful per year.
2) And then just have the US Government offer either special very low interest rate financing to these companies that are in trouble, and/or offer to insure these troubled mortgage packages. With insurance attached to them, they will finally be sellable, and you will create liquidity in the credit market instantly. You will also force these companies to work their way out of the mess themselves. The cost for this might only be $40 Billion or so to the US taxpayer. This covers the other 35% of the market trouble for fractions of the cost of the proposed bailout and keeps the government out of the market as much as possible.
3) Follow this up with lots of reform of Fanny Mae and Freddy Mac. As much as it may hurt in the short run, they need to tighten the requirements to be able to get a loan. No more zero down, with poor credit and not enough income! These lax lending regulations through Fanny and Freddie caused most of this trouble in the first place. Once the market comes back, we will have people in homes in solid financial condition and this won't happen again!
McCain's health care plan is WAY, WAY better than Obama's. Totally a free market solution! You buy your own insurance. $5000 tax credit. For a lot of people that pays all or 1/2 of the total cost! Plus it INCREASES competition by making your choices for insurance nationwide. Rates will go down. If you don't want to be forced to have insurance, or only want a high deductible plan, you don't have to be forced into anything. FREEDOM!