The central question facing policy makers: How does the government help banks exorcise their bad bets? For many of these assets, there is no current market price. If the government buys the assets for more than they are ultimately worth, taxpayers will take the hit. If the government pays too little, banks will have to record losses on other similar assets, exacerbating the problem.
Read it all from the front page of today’s Wall Street Journal.
It’s deja vu all over again, isn’t it? How about letting banks who did stupid things with their investors’ money go belly-up? Would that not be instructive to those that remain?
They don’t know what to do. They are desperate enough to try anything and in the resulting confusion billions are going to be skimmed off for pet projects (all, of course, are absolutely necessary and will stimulate the economy(and bring in votes)). The only thing for certain is that the taxpayer will foot the bill.
This represents the entire problem of government setting a price on a thing. While government is the primary cause of the problem, it must be the market that sorts it all out.
Of course it WOULD be smart to remove the prime factor in the problem but as no one in government can even admit that they might be just a teeny-tiny bit culpable, we will continue to see weak markets and stupid politics.
And people actually voted for these bozos on perpose. Yet another evidence that the education system has failed this country.
Don
Don a real help wold be for everyone to admit that all (and both) parties have responsibility for this mess.
4. Br. Michael wrote:
“Don a real help wold be for everyone to admit that all (and both) parties have responsibility for this mess.”
I definitely agree – as much as that is true. But, I remember, and have considerable evidence, that one party tried to get more regulation for Freddie/Fannie and one party effectively resisted regulation. Ii’ll not hold both parties equally responsible.
Don
Don, it goes beyond the last 8 years. But, if we want to point fingers we can do that until the whole rotten mess crashes down.
Wait.
I’m so dreadfully confused.
I thought we just went through the “Bank Bailout” — last November and December with lots of hand wringing and swearing that if this didn’t happen [i]we would all be in bread lines by January[/i].
Now we’re “doing it again”?
Has anyone admitted yet that they were dead wrong and the last “Bank Bailout” didn’t work?