That said,---I like the idea of a parallel banking system, but I doubt the political feasibility. As ThatBritGuy has pointed out, one of the jobs of banks is not only to allocate credit, but to distribute and to determine credibility. We allow this failed system to do this, so we should not be surprised when the banks view with little enthusiasm our ideas about replacing them with a less parasitic system. And unfortunately, it would take a rip-roaring, pistol-waving revolution to pry the financial whizbangs out of their secure buildings--or a good fire.
Do I smell smoke? Capitalism searches out the darkest corners of human potential, and mainlines them.
Your Diary deserved more attention than it apparently got.
Personally, I'd use the $700bn capital as a guarantee base for new unsecured credit creation, and for direct investment in distressed mortgages - the "Debt/Equity swap" I bang on about intermnably.... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
I have updated the plan, cut the size of the proposed equity loan in half and re-contextualized the argument in terms of what has subsequently happened, but the faxes continue to flow. I suspect this is the least used avenue of communication to congress. If nothing else, I hope to seed the idea widely amongst staff.
The reason this very reasonable approach is unpalatable to congress at this point is, as geezer in paris noted, due to the nature of campaign finance. It may be that a squandered $700 Billion is the cost of getting real attention in January for campaign reform. I just got a strong letter on the subject published in the Arkansas Democrat Gazette. I am gratified to see others on ET recognizing what a crucial issue this is. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
