This industry is set to crash and burn.
WE don't KNOW that the banks are insolvent (though we think they are) because they will not let us see their books. If we saw their books we THEN would know.
But they are not fools: There is no way they would let us see their books. How bad is it? Based on how rotten their own position is, they are not willing to other banks whose position is likely as bad.
And is that not bad enough for you? What more, really, do you need to know?
If you were a rich foreigner holding dollars, why would you buy into these insolvent banks? Well, your dollars are going to lose value no matter what you do. By buying pieces of the financial system before the dollar loses value, you might--while taking the inevitable loss--acquire control. The Fates are kind.
The people who have bought into these banks have not bought when all shares in the open market (which keeps the balance sheet unchanged. I presume effectively the bank has issued them with new shares, and if they inject enough capital to make the bank barely solvent everything can keep running. We have met the enemy, and he is us — Pogo
