Despite that apparent bias, the following quote, from Saturday’s NY Times in an article describing the immense job of implementing the bailout, is worth focusing on:

“With anyone short of the stature and honesty of a Paul Volcker running it, you need to worry a lot about conflicts of interest,” said Alan S. Blinder, a former vice chairman of the Federal Reserve, referring to its former head. “Unfortunately, there just aren’t many people with the expertise you need but without any possible conflicts.”

With the above as prelude, I humbly advance the following:

Dear Chairman Volcker,

1. There’s currently a tax on capital gains. Long or short term, there’s no limit on the amount of profits that can be taxed.

2. The deduction on losses, however, is limited to $3000/year.

3. Make the deduction unlimited as well.

4. Short term, this may induce further selling which will lead to a faster bottom/cleansing of the weak hands.

5. It will also ease the taxpayer’s burden by leaving more post tax dollars in their hands.

6. Though it will temporarily reduce federal revenue, making the government both the lender and debtor of last resort, it would give the real economy (meaning the American people) a chance to work its way out of this mess.

Respectfully,

LK

PS Obama announcing that Volcker will be a key economic figure in his administration would be worth a substantial number of undecided votes.