Save the Fat Cats

This blog is by my cousin, P. Ranganath Nayak.

A propos Nicholas Kristof's comment about CEO salaries (October 2, NY Times) – there is a straight line connecting these three dots: outsize executive pay, George Bush's tax cuts for the wealthy, and the sub-prime catastrophe. Because of the first two, money got concentrated in a few hands to the point that they did not know where to put it. There are just so many yachts and houses and fine wines and paintings you can buy. What did they do? They took their money to investment bankers, private equity firms, and hedge funds, and said, "Get us a terrific return on this." The rocket scientists and MBAs on Wall Street invented sub-prime lending with Adjustable Rate Mortgages for that purpose. The SEC and the Fed were conveniently looking the other way. Voila! We had a housing bubble that was like a bomb ready to explode. All that was needed to light the fuse was the oil price shock. And here we are, with the whole world's economy at risk.

The best way forward is to massively tax huge salaries and wealth, and redistribute it by cutting taxes for everyone else, so that ordinary people can put food on the table, get medical insurance, drive to work, pay their mortgages, and send their kids to college. Let's start by increasing the taxes paid by Henry Paulson, George Bush, and John McCain.

It's time to get mad and get even.

G. M. Prabhu: Makes perfect sense. What does not make sense, however, is that the economic pundits are waxing and waning about why "some measures won't work," but no one has proposed concrete steps to correct the excesses. It seems like we have accepted the paradigm of "privatisation of profits and socialization of losses" (Prof. Roubini of NYU). You can e-mail comments to pr.nayak@verizon.net

Reference:Wall Street and the Making of the Subprime Disaster

------