Yer doin' it wrong ....

As I said the other day:

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If we're going to spend taxpayer money to soften the blow, the taxpayers have to have a stake in the outcome. If we're going to bail out a bank or an investment house, the taxpayer, in the persona of the U.S government, must have a controlling interest in said institution. There is no confidence in the bunch of infidels (and imbeciles) who have been running the show and that confidence won't return until investors know all are playing with the same rulebook, a rulebook (yet to be written) that doesn't allow for shady deals using questionable instruments, leveraged 100:1.

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Dday today:

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There was a ridiculous amount of news for a Friday night, the foremost being that President Paulson is finally giving in and doing what should have been done in the first place, purchasing an equity stake in failing banks. The problem is that he is still doing it wrong.

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Coulda told you that 3 weeks ago from Europe:

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Paulson said the government’s program would be designed to complement the efforts of banks to raise fresh capital from private sources. He said that the government’s stock purchases would be of nonvoting shares so that the government will not have power to run the companies.

Actually, we need the power to run the companies, or at least tell the bankers what to do, more specifically that they must lend to one another. They aren't the kind of shares that Warren Buffett got from Goldman Sachs. If this doesn't change bank behavior then it essentially will do nothing. A bank that refuses to lend is not a functional bank, and the government ought to take it over. As Krugman says, this is a half-Gordon - referring to Gordon Brown's recapitalization plan (not the part about suing Iceland).

Indeed. Taking non-voting shares as equity for our investment will do nothing to reign in, or dictate, the behavior of the banks just as any of the big companies you and I hold stock in could give shit less what we think. Ain't nothing gonna change until these companies are nationalized ... properly. That means removing the officers and board and putting government regulators in their place until the pieces of the business can be sold off, to the public's profit and benefit.

A complete auditing of the financials should also be done and any illegalities uncovered should be prosecuted. That would give people confidence. Anything less won't work.

Unfortunately, there will be a lot more pain before these idiots finally do get it.