by David Haggith, The Great Recession Blog:

It’s not hard to figure out how to end the rinse-and-repeat cycles of financial destruction that I described in “The Bailout Bonanza is Back! (Pt 2: Hedge Hogs Demand More!).” It’s just hard to do politically because the people who are getting bailed out run the system.

Trump’s White House is full of them in all the top financial positions. Congress is owned by them. It doesn’t matter what political party you’re talking about. Many are the pocket politicians of bankers and brokers. Others cannot see outside of their religiously held ideologies. The system corporate and financial reform we need has to start with holding your own politician — the one you voted for — to the task of reform, not someone else’s. Hold the one accountable to you to change.

As I described in that article and others in the bailout series I’m now writing, the bailouts are already happening all over again on a scale greater than in any part of the Great Recovery (that never recovered). The Federal Reserve and the US goverment are already pulling out all the old plans from the Great Recession. So, if you don’t want to repeat the Great Recession and its recovery program all over again, you need to take serious action now.

Here’s the plan. It’s easy to understand, and it’s fulfilling to your need for justice.

It will also do a lot to narrow the divide between the rich and the rest that the last recovery plan divided into a chasm as wide as the Great Recession, itself.

The ONLY salvation that should be allowed for corporations is bankruptcy that saves the company for the good of the employees and good of the nation by putting it under trustee control, firing all executives in the process and completely flushing out the existing board shareholders. Pay all corporate debts completely down that were used for buybacks (or down as much as possible) out of the stockholder’s value (obtained by those buybacks) still left in their shares. Turn the company over to new owners who buy those shares at fire-sale prices while the old owners are legally prohibited from buying them. Assure the same employees keep working the whole time (except for top-tier management) because the employees certainly didn’t create this corporate mess. Then, only when you’ve exhausted all value out of the shareholders to pay employees first and debtors second, bring in what bailouts remain necessary from the government for the good of the nation with the government as a creditor first in line, not a stockholder. Save the company, not the crooks.

In short, do not bail out the shareholders who drove this greed in the marketplace, and do not bail out executives who executed it or boards that a allowed it. Do it through constructive bankruptcy that pays off debtors by depleting shareholders because that’s how capitalism works! It was done with major airlines in the past that went on to perform better than ever because we didn’t keep all the rubbish inside of them. Don’t bail it out! Clear it out! Let the coronavirus bring creative destruction.

And THEN we will certainly not be perpetuating moral hazard into a new cycle because no stock investors are EVER going to want that to happen to them again! DEMAND that from our politicians and government attorneys and judges. Scream for it! Rattle the cages and fill the halls! Or you won’t get it.

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