Americans have been living beyond our means, and we should have recognized that fact the moment we saw those glass Voss water bottles. But we can recover from our misbehavior through a little austerity, like having only one house -- perhaps one NBA players couldn't play chicken in. More than the mistakes made along the way, however, I fear the overreaction to them, a lesson I learned from chief economist Wyle E. Coyote.
So let's not stop the short-selling of financial stocks -- the only brake on overindulgence -- as Paulson did last week. Let's not strip Congress of yet another power by giving the Treasury secretary the right to decide where to dole out a large portion of our budget. Let's not encourage more risky loans by making profits private and losses public. And let's not create some bastardized form of communism in which the new rule is, "From each according to his ability, to each according to the size of the investment bank he owns shares in."
Banks are in trouble. Why? They're bankers for crying out loud! They are supposed to know about money and economic principles. Well, most of them do but they were backed into a corner by government regulations which required them to give credit to bad risks. As the money started rolling in, they got caught up in the euphoria and found themselves in a bind with loans not being repaid and depreciated housing assets to fall back on. This, however, does not persuade me to bail them out. They would not be inclined to bail me out if the situation were reversed.
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