Financial Crisis
Jul. 15th, 2008 01:58 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
mik3capThe sky seems to be falling... except that Chicken Little isn't actually trying to warn anyone, he's telling everyone that everything is okay and hoping that enough banks will somehow scrape up enough cash to prevent total economic collapse.
I don't think the Dutch Boy has enough fingers to plug all the holes in the dike. Bear collapses, and JP holds them up. Student loans bought up by the president. Fannie and Freddie go down, and the Fed promises to hold them up. How many loans can the government buy? Is Lehman next? Who's going to hold up the holders? These entities are collapsing dominoes, transferring debt between one another like so much kinetic energy, and at the end of the line we have the boogeyman no one wants to acknowledge, the asteroid plummeting down from the heavens: the unknown amount of over-leveraged credit card debts. Who's going to pay when the credit card banks need all their money back? How "leveraged" are they?
Is all this government backing just staving off a needed recession, and possibly delaying a recovery? Shouldn't bad banks just be allowed to fail, in true capitalistic fashion?
I don't think the Dutch Boy has enough fingers to plug all the holes in the dike. Bear collapses, and JP holds them up. Student loans bought up by the president. Fannie and Freddie go down, and the Fed promises to hold them up. How many loans can the government buy? Is Lehman next? Who's going to hold up the holders? These entities are collapsing dominoes, transferring debt between one another like so much kinetic energy, and at the end of the line we have the boogeyman no one wants to acknowledge, the asteroid plummeting down from the heavens: the unknown amount of over-leveraged credit card debts. Who's going to pay when the credit card banks need all their money back? How "leveraged" are they?
Is all this government backing just staving off a needed recession, and possibly delaying a recovery? Shouldn't bad banks just be allowed to fail, in true capitalistic fashion?