Scott,This can’t be accurate. Could it?http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html16.7 Trillion Euros of toxic assets in European banks?The global GDP as of 2008 (before the downturn) was 70 Trillion USD, so the above number, if accurate, would be a shattering amount.I also heard that President Obama and Treasury Secretary Geithner were informed (privately) that the US banks (in conglomeration) were essentially insolvent to the tune of 1-3.6 Trillion USD, and that is why Geithner did not go into any specifics yesterday.I know, I am reading listening to some of the doom and gloom sources, but I was just wondering.
Scott,This is off-topic, but I'm tired of people talking about nationalizing banks. When did I wake up in a socialist country? Here in the US, we have a very clearly defined solution for insolvent companies -- bankruptcy.Nationalization is really cover for US taxpayers bailing out investors in banking companies. The fact that those investors include powerful domestic and foreign interests is just tough titty. Here in the US, we have a clearly defined bankruptcy process to fairly distribute the remaining assets of insolvent companies.
Hi Scott. Remember Claremont, John, and Debbie? No corporate taxes is a great solution. Below is what I believe is a priori. DO WE NEED A STIMULUS? Economic theory such as the money supply, lifestyle economics, all of the creative destruction, gold, and supply side vs Keynesian chat have failed. Borrowing money for a stimulus package assumes the reason we came out of the great depression was because we geared up for a war.Actually, none of this is true. It is far simpler. Food was rationed. Gas was rationed. People had “victory gardens”. Men were overseas. Women worked. The right thing to do was buy US savings bonds. There were no vacations. Entertainment was the movies or the USO. GM was making tanks, not cars. WHAT COULD YOU SPEND MONEY ON? THE SOLDIERS AND SAILORS SENT THEIR MONEY HOME. THEIR SPOUSE PUT IT IN THE BANK. “ROSIE” BOUGHT BONDS WITH HER MONEY FROM BUILDING PLANES. PEOPLE FROM THE DEPRESSION HAD SEVERAL FAMILIES LIVING UNDER ONE ROOF. BY THE TIME JUNE 1945 HIT AND PEACE BROKE OUT, WE ALL HAD TONS OF SAVINGS! BECAUSE WE FELT SECURE FROM WAR, BECAUSE WE FELT SECURE BY OUR SAVINGS, BECAUSE WE WERE VIRTUALLY DEBT FREE, WE BOUGHT EVERYTHING! THE REST OF THE WORLD WAS DESTROYED! WE BOUGHT AMERICAN BECAUSE THE REST OF THE WORLD HAD NOTHING. GERMANY WAS NOT EVEN PERMITTED TO MAKE BALL BEARINGS FOR 40 YEARS. This is my theory of SECURITY ECONOMICS: PEOPLE MUST FEEL SECURE TO SPEND. All other theories are valid as long as this one is in place. Without it, they all fail. To solve the current economic plight and create security we should have a 24 month mortgage holiday. Everyone gets one. Banks that were marginalized by their need for greed will cease to exist or be taken over by stronger banks. People have figured they have to save. The velocity of money has stopped. Eventually people will reliquefy. If we don’t do this, it will take a long time for velocity to pick up. At the end of 24 months mortgages are again being paid. CITI and other greed banks are gone. There are still thousands of banks left. They have cash from holiday investors. Investors will be more cautious. Perhaps even ETHICAL BEHAVIOR will replace greed, lying, and cheating as a requirement for graduation from our finest universities. I value your perspective.The written word cannot replace live discussion.Jack Kenny-old guy.
chaim: that sure sounds like an unbelievably large sum, but I have no way of knowing much about it. I get the feeling, however, that the market is extrapolating the current downtrend as if nothing will stop it. That ignores all the dynamics (lower asset prices, massive writedowns, monetary ease, etc.) that are working to correct the underlying problems.
Speak: unfortunately we have been moving in a socialist direction for some time now. The only hope for improvement is that the stimulus plan will prove to be not only a failure but an embarrassment. Somehow we need to understand as a people that government interventions of this sort just don't work.As for the banks being nationalized, I don't think big investors are being bailed out. They have already been wiped out, as evidenced by the decimation of the market caps of big banks.
Scott:Not sure where to put this, so here it is.Tonight at 5 pm PT CNBC will be air two hour program titled "House of Cards", which is suppose to be a graphic description of exactly how we ended up in the financial situation.
If they don't lay a good portion of the blame on monetary policy, and if they instead blame greedy Wall St. executives and derivatives, then they will be doing the public a disservice.
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