"Only rules can bring the markets back in the longer run"
Writing in today's New York Sun, economic historian Amity Shlaes stresses the importance of rules over rulers in these troubled financial times, offering "three rules-based reforms [that] cry out for implementation":
First, no more bailouts. Otherwise, it is already clear, the auto companies will be next. The airlines are also in line.
Heck, you can even give this reform a name: The Lehman Rule—and then hope that the Treasury abides by it. One reason the Dow drooped during Mr. Paulson's press briefing on Monday was that he seemed to be indicating he might break the rule soon.
Second, clean up the rating system so that numbers speak something closer to the truth.
Third, make America more competitive by lowering corporate taxes and other levies so foreign firms will want to fill our new vacuum. The worst thing about John McCain's new "crisis" advertisement is that it suggests a strong man—and not a strong country—is the answer. Here President Bush's response, that he had faith in our economy, was more useful.
