A bit more on Geithner's testimony from
CNN. The money-quote:
"Our system failed in basic fundamental ways," Geithner said in written testimony released Thursday morning by the panel, which is chaired by Rep. Barney Frank, D-Mass. "The system proved too unstable and fragile, subject to significant crises every few years, periodic booms in real estate markets and in credit, followed by busts and contraction."
Hogwash! Regulators failed to regulate. Laws (in particular, laws supported by Barney Frank) created perverse incentives. This phraseology is just like President Obama speaking about charitable contributions in the past tense in his speech. In his tone, Mr. Geithner believes he is signing the death certificate on capitalism. More:
Geithner also called for "substantially more conservative capital requirements" for big firms and consistent standards for executive pay.
Perhaps more conservative capital requirements are a good thing. But, the Administration chooses to entangle these with red herrings...like executive pay. So, the government is now going to dictate executive pay to privately held (non-government) firms?? Where does the decision of a Board of Directors about how much to pay a CEO translate into a matter of national security...or even a
public good? No, this is populist backlash at its best. But we better be careful. We may get exactly what the mob wants. Guillotines for the "obvious crooks" quickly turns into guillotines for the masses.
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