Today’s Wall Street Journal contains an op/ed by Brian Wesbury, one of the more level-headed and highly respected economists in the country. His recommendation is that Congress suspend mark-to-market accounting rules, because investors refuse to put money into companies that may not be around because of phantom valuations of their securities portfolios.
He’s right, and this is an easy and less-costly fix than the one presently being floated around Capitol Hill. However, since it’s both easy and cheaper and will actually solve the crisis, I guarantee you that Congress will not propose the obvious.
In fact, over the last two weeks I have never seen so much pomposity, arrogance, narrow-mindedness and lack of common sense in Washington. Senator Chris Dodd (I nearly mis-typed his name–Dodo!) and Rep. Barney Frank either clearly do not understand the problem or are totally unwilling to admit that they caused it. When I make a mistake, it’s my responsibility to admit it and correct it. This never happens in Washington. And lately, whenever anyone steps behind a microphone, unless it’s Paulson or Bernanke, there is very little good that can come of it, and I immediately tune them out.
Unfortunately, this has been a common complaint about Congress for over 200 years–since it’s inception. Create a problem; fail to fix it; create a solution that’s even worse. Here we go again.