Monday, October 22, 2007

Ben's Right

Ben Stein penned another very good column this weekend. It struck an appropriately optimistic and bullish tone for the stock market and economy.

Ben’s also right about some very bad bets made by the big banks. I certainly hope that taxpayers won’t wind up picking up the tab for this stuff. (Incidentally, I thought everybody agreed after Enron that off-balance sheet stuff was strictly verboten. Is the Paulson Treasury now condoning off-balance sheet activity? If they are, they’re dead wrong.)

Transparency means putting everything on the balance sheet for investors to see clearly. A big reason investors won’t go near subprime loans of any kind is because they don’t know exactly what the loans are. They don’t know what’s inside the so-called conduits and what sort of pricing is involved.

Just like the homebuilders, banks have got to slash prices. They need to take the hit to get rid of their unwanted inventories. The sooner the better.