James Grant, is the respected author and owner of James Grant Interest Rate Observer, which a lot of people agree is the finest piece of financial writing in the world at the present time. Jim’s reputation in financial circles is weighed in gold.
He writes in the current edition of Foreign Affairs offering some excellent advice to the new President.
One major bit of advice is repairing the monetary system by returning back to the Bretton Woods time of fixed exchanges backed by gold. Another is taking a closer look at the disgusting direction US Federal budget finances have been heading over the past 10 years. Last year the US Federal government couldn’t adequately account for $55 billion, which is absolutely astounding. The GAO actually qualified the government’s accounts.
However, before rushing off to improve what he cannot directly control, the newly installed CEO of the federal establishment should attend to the managerial mess in Washington. On the stump, Senator Barack Obama (D-Ill.) has talked about raising taxes on the rich. But there is no fatter cat to skin than that of the federal apparatus itself. In fiscal year 2007, the government took in $2.6 trillion, 7.6 percent more than it did in fiscal year 2006. Since 2003, federal cash collections have increased by an average of $200 billion a year. Are imposts of this staggering size truly necessary? Do they advance the national interest in a time of evident recession? In a new report, the Government Accountability Office charges that federal agencies last year mislaid, or misdirected, $55 billion. In 2006, $41 billion went missing. Last year, for the 11th consecutive year, the GAO refused to opine on the government’s financial statements, but it did cite, among other deficiencies, accounting chaos at the Department of Defense. As a matter of simple equity, plugging the leaks in the sieve of state should precede any new tax increases.
Secondary advice is on fixing Wall Street suggesting that the way to do that is by perhaps going back in time, looking at and adopting certain facets of the old partnership system where the partners total net worth was at risk. He suggests that a legal way could be found to incorporate certain parts of unlimited liability for senior managers and board members of financial institutions.
Jim is a must read whenever he comes out in public or taking out a subscription to his bi-weekly newsletter.