Thursday, January 29, 2009

Banks Have Brick Walls, Right?

At least then people will have something to talk to and bang their heads against.

The "Bad Bank" idea is gaining all kinds of traction these days. The whispers of nationalization are also starting to get louder, this time not from the people, but the government itself. Geithner even brought it up as possibily an inevitable need for a short term. Like the government ever lets anything go once they get it and the wrong people figure out how to use it for political gain.

I'm pretty much on record that what should be done is nothing. The $2 trillion this could end up costing (and counting) could be better spent building a solid social safety net for all those who would be affected by the monumental collapse that the government keeps stretching out.

Let's look at the $1.5 trillion in "stimulus" packages so far - that's $5000 for every man, woman, and child in the US. If the government had simply handed $5000 to everyone, they'd either (a) spend it on something, stimulating the economy or (b) put it in the bank, stabalizing their balance sheets. Sure, some would just put it in a box, but that would be minor. Instead, the plans continue to try and socialize the losses and fuckups of large corporations, while privatizing gains and hiding the real numbers since there's zero accountability. Yes, I realize giving everyone $5000 is overly simplistic, but it would have had more of an effect than what's been seen so far, or will be seen.

What if the Fed/Treasury/etc. get their wet dream and the banks start lending again? Is there some idea that they'd lend anywhere near what they did before? I mean, banks ARE lending money still, that's their job. The "problem" is that they're only lending to people with good credit now, and people with good credit aren't borrowing, because they're fiscally responsible and don't NEED to go into debt. If the banks loosen their standards, it would be only slightly. The unemployed twat who can't save $20 let alone $20,000 won't be getting a mortgage ever again. The entrepreneur who has a boneheaded idea that lacks a viable market won't get business loans. In short, credit worthiness and viable business plans will once again be required to put yourself in debt. Banks want to have safety again, and they aren't going to throw money away just because the government asks. In short, all this "stimulating" won't actually make much of a dent, even if the banks DO "start" lending again.

Unless the government takes them over. Citibank of America, a federal corporation, anyone?

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