> What's clear is that a bunch of financial institutions
> have made
> mistakes and lost money. What's unclear is why anyone
> (other than the
> owners and managers) should care. People make mistakes and
> lose money
> all the time. Restaurants fail, grocery stores fail, gas
> stations fail.
> People pick the wrong stocks, they buy the wrong cars, and
> they marry
> the wrong spouses without turning to the Treasury for
> bailouts.
> So what's special about banks? According to what I keep
> reading,
> it's that without banks, nobody can borrow, and the
> economy grinds to a
> halt.
> Well, let's think about that. Banks don't lend
> their own money; they
> lend other people's (their depositors' and their
> stockholders'). Just
> because the banks disappear doesn't mean the lenders
> will. Borrowers
> will still want to borrow and lenders will still want to
> lend. The only
> question is whether they'll be able to find each other.
> That's one reason I feel squeamish about the official
> pronouncements
> we've been getting. They tell us bank failures will
> make it hard to
> borrow but never that bank failures will make it hard to
> lend. But
> every borrower is paired with a lender, so it's odd to
> state the
> problem so asymmetrically. This makes me suspect that the
> official
> pronouncers have not entirely thought this thing through.
> In the 1930s, a wave of bank failures did make it hard for
> borrowers
> and lenders to find each other, and the consequences were
> drastic. But
> times have changed in at least two relevant ways. First,
> the disaster
> of the 1930s was caused not just by bank failures, but by a
> 30%
> contraction of the money supply, which is something
> today's Fed can
> easily prevent. Second, as any user of match.com can tell
> you, the
> technology for finding partners has improved since then.
> When a firm
> wants to raise capital, why can't it just sell bonds
> over the web? Or
> issue new stock? Or approach one of the hedge funds that
> seem to be
> swimming in cash? Or borrow abroad?
Bank of America and other solvent financial institutions are ther to snap up
the scrapeings. Southwest and Global Aero Logistics took over the company I
used to work for after 9/11 finally drove us into bankruptcy. There is a
process where the scavengers feed on each other until new the strongest, most
vicious predators survive. Evolution in action...
What I would like to see is nationalization and get rid of the middlemen and
other agents of greed. Instead of bailing out the corporate crooks, get rid of
them and their golden parachutes and start bailing out the poor suckers who
lost their jobs, or can't meet their balloon payments! We need another FDR to
start up some a new CCC, WWW etc. and start building up the infrastructure, and
stop hemmorraging trillions of dollars for foreign war! If only it were that
simple...
Jon
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