The Confidence Game

It would seem that a lot of the concerns about the financial markets has to do with confidence. See here, here, and here, for instance.

It would also seem that The Market, as in investors and bankers around the globe, have lost confidence in themselves. They are saying that without government assistance there will be a total credit freeze, as everyone is worried about how many of their bad investments will tank and make their balance sheets so unstable as to render them unable to let go of the reins of any cash they have, much less trust that any loans they make to other banks will be honored, since those banks might have a Titanic loss from those pesky derivatives and high-risk mortgages.

I get it. We get it. Something needs to be done. We need to have our government take some sort of action that will restore confidence in The Market and give banks adequate cash flow breathing room to keep things moving along.

But this is a complicated mess. We don't know how much money needs to be covered. (That $700 billion? It's a wild guess. Seriously. Ask Paulson.) We'd like to do our best to protect any taxpayer dollars that get used - not mention being able to repay the loan we'll have to take out in order to come up with this colossal cash cow. We don't want to reward those clever financiers and investors who got us into this mess. And we can't just fix the credit crunch, as it will be meaningless without addressing other economic problems such as job losses, the inordinate cost of health care, energy dependence, etc.

No small task, indeed. Is this the kind of thing that should be rushed? My version of wisdom say, "no." So, if there's a confidence issue and the underlying problem requires some time, I have a suggestion:

Why don't our leaders make a statement something like this, "We understand that the banking and finance industry has gotten itself into a pickle. A very complicated  pickle. We're going to help. We promise. To do so, we need to look at the problem closely and work on a solutiion that everyone can be comfortable with. That's consensus. That takes more than a week on something as big as this. So, give us 8 weeks. We promise that by then, we'll have and Ambulance bill for you life-threatening emergency. But you have to hang in there with us. It's not fair to ask us to rush this. How long did it take to get into this mess? Years. So, surely, you call all take a few deep breaths and give us a few weeks. Know that, in the end, we've got this covered. Until then, please stay calm. If we can come up with any universally agreed upon measures that we can implement immediately, we will. We'll be transparent about our analysis and any proposals we're considering and we'd love to hear from you, as long as you appreciate the need for calm and patience. Thank you for your cooperation and concern for your fellow citizen as we figure out what's best for everyone and a sustainably healthy economy".