This is a liquidity crisis
No it's NOT!
It's a solvency (or credit) crisis. Liquidity is being provided massively by the central banks - so much so that they are even taking credit risk on their balance sheets in increasing volumes, and it's still not enough.
Nope, banks don't need liquidity, they want to get rid of bad risk. In the long run, we're all dead. John Maynard Keynes
just like nationalization.. it really does not matter regarding the final finanatial consequences.. of course the bill is bigger if there is a solvency problem.. but both will help from t e top, the Dodd's plan is more flexible in some sense but moe complex , so easier to get nasty surprises.
But if you put the cost at two or three trillion dollars, you have that taxpayers will get roughly even if it is a iliquidity problem. If it is a solvency problem, taxpayers will nationalize most banks.
The Dodd program has the effect of creating uneven competition between rescued banks, non-rescued banks and partially rescued which is unfair. Nationalization of some banks will do the same but wthout the weird partiallyr escued. Natioanlization of the whole system will erased competition and fix one size fits all.
Precisely yesterday I made a long long comment trying to explain why it seems to be that there is no way to know with certainty which one will work better,or if they would work at all. There is no epistimelogichal way...
you just try one.. and in this case the palatable one (given the US media)
A pleasure I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude
