October 2008

by Moshe Adler

Wall Street must be saved for the sake of Main Street, Secretary Paulson and Chairman Bernanke tell us. First, everyone has toxic financial instruments in their 401k's; and second, these instruments are clogging the credit system. But in fact neither claim is true.

The first claim is not true simply because the majority of Americans don't have any retirement accounts at all. And the claim that the credit system is clogged is not true because there is no object that can be removed in order to clear it. What is true is that the securities that Wall Street invented are toxic. But . . .