How to reform the system
So, my last two posts have argued (1) that we are faced with a deeper crisis than even the media have lead us to believe and (2) that there is a better alternative to the proposed bailout (and both the bailout and my plan are superior to doing nothing). Now, I want to turn to reform. How can we avoid making the same mistakes again in the future?
In a discussion I launched on e-thepeople, someone referred me to the “genesis plan.” In it, the plan proposes changes regulatory changes to limit/end off balance sheet vehicles, to reform credit derivatives and to re-impose limits on leverage for financial institutions. I find the links between the causes and effects to be well-argued, so I think his proposal deserves serious consideration.
As a long-term regulatory reform package, I think it dovetails nicely with my short-term plan to encourage a quick recovery from the current asset bubble we are in.