The dullards want ‘business as usual’. They’re propping up bad banks to try to keep a damaged dream alive. It won’t work. The world is running scared.
Good money was paid for bad paper. This illusory wealth must be bled out of the system like air out of a radiator. It would be smart to take the pain all at once, rather than suffer a ten-year agony of recession.
They should guarantee the deposits of savers, demand shares in the banks worth saving, hive off bad loans into a ‘toxic bank’ and let the guilty (shareholders, executives, the corporation of the bank itself) suffer the pain. Instead taxpayers (the nation) will.
Putting taxpayers money into damaged banks and somehow expecting lending to return to normal is magical thinking, at best.
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At worst, it’s idiocy. Instead of the banks going bust, countries will.
This is already starting to happen in the U.K. Can a country borrow indefinitely against its future tax-takings to prop up its economy; an economy heavily reliant on the financial sector? Would you lend money to the U.K. or Ireland now?
I wonder who’s going to end up owning us in the end?