by Larry Mason

Created on: October 02, 2008

It is endemic in human nature to resent others getting what we perceive to be more than their "fair share." Studies have consistently found that people will actually take a loss rather than a small gain if this would reward another participant disproportionately. This seems to be exactly the emotion that's in play here. There is no question in my mind that we would all (except the ubiquitous short-sellers) benefit from this rescue plan. But we don't want to see those "fat cats" continue to be unjustly rewarded, even if it jeopardizes the bailout. Paulson has warned that limiting executive pay could cause some firms to decline to participate, thereby weakening the effect of the plan. If enough fail to take part, the whole financial system could still collapse.

Liquidity has drained out to an extent not seen since the Great Depression for the simple reason of trust. Nobody wants to lend since the lending entity is not sure it will get its money back. Solid firms like GE and Caterpillar are unable to get short term financing for their day to day operations without paying a severe interest rate. This can't continue without threatening our entire economy. When major companies become unable to meet their payrolls it will impact us all in a devastating way. So we need broad participation to remove enough "toxic debt" to restore confidence in the system, but limiting executive compensation could poison the well we all drink from.

I am reminded of an uncle who owned a hardware store back in the 20's. It was a solid business which supported his family comfortably. When the stock market crashed in '29 his reaction was "Serves the bastards right." Six months later he lost his store.

So here I am saying the same thing nearly 80 years later. Why? Because I suffer from a common human dilemma. I prefer the threat of us all suffering to having the few at the top continue get their unjust rewards. Am I nuts,or what?

No, because I truly believe that non-participation is an idle threat. The Stock Market reaction on Monday when the House voted down the plan was just a shot across the bow compared to the explosion if it finally fails.Executives are unlikely to go it alone in this crisis just so they can continue to pull down their obscene compensation. Wall Street is petrified. Its time for Main Street to hold their feet to the fire and do the right thing for all of us without unjustly rewarding the perpetrators.

Learn more about this author, Larry Mason.
Click here to send this author comments or questions.