Preserving the electrical grid is of little help when the generators break down. Preserving the railroads is pointless when there are no trains in the first place.
Yes. That is why you don't unbundle the grids.
Like I said before, states are by far unable to guarantee, let alone replace the whole banking system.
They do not need to replace the whole banking system. GoldmanSachs does not need to be run by the government - it can be allowed to go into Chapter 7 like every other insolvent company which is not worth keeping as a going concern.
All the government has to guarantee is the clearing system. And that is perfectly well within its capabilities. It may have to confiscate the assets of a few hedge funds to do so, but hedge funds are expendable.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
Precisely, so nationalizing the clearing system is not enough: we need to nationalize the banks also, really the whole banking systems. We cannot possibly satisfy to a few ATM, right :) That's why I said earlier that we'll be led to taking over all intermediaries. If G Sachs is allowed to fail, who will finance the economy then? The state, since it's the only big actor standing. If it needs to finance the whole economy, that means it'll have to take it over - or at least that's what it'll all amount to. Free at last! Free at last! Thank God Almighty, we are free at last! (Martin Luther King)
If G Sachs is allowed to fail, who will finance the economy then?
In the short term, the state, via massive construction programmes to green the economy. Programmes that are long overdue and will have to be implemented anyway, eventually.
In the medium term, some of the several thousand local and regional banks will fill out the market for project finance. And some of the big banks will go into Chapter 11 instead of Chapter 7, which means that they will still be around, but under new (and hopefully improved) management.
