Country Club!

The latest attempts at economic stimulus by policymakers seem to create an exclusive "country club," a few firms who are big and cozy. Bigness apparently is the best proxy for competence and so admittance to the club is solely based on "assets under management." One creative idea is to allow these country club members to buy securities in conjunction with the government. The government will effectively subsidize the purchase of the "toxic securities" by these great firms who have "stepped up" to save the economy. Some of these firms may purchase securities owned by themselves at a price higher than what they are worth. These purchases are partly "assisted" by the government using taxpayer resources. This is perhaps the first time that a company may be allowed to purchase its own assets (that are under water) at a price higher than what they are worth. As history and common sense are being rewritten everyday, this may yet be the most creative policy of them all.