Ailing Banks May Require More Aid to Keep Solvent
Some of the nation’s large banks, according to economists and other finance experts, are like dead men walking.
A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, they say. The banks, in their view, are insolvent....
The Treasury program leans heavily on a sketchy public-private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts say, the government needs to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.
It is the basic blueprint that has proved successful, they say, in resolving major financial crises in recent years.
Japan endured a lost decade of economic stagnation in the 1990s before it adopted such measures from 2001 to 2003.
The Swedish government took tough steps in 1992 and Washington did so in 1987 to 1989 to overcome the savings and loan crisis.
“The historical record shows that you have to do it eventually,” said Adam S. Posen, a senior fellow at the Peterson Institute for International Economics. “Putting it off only brings more troubles and higher costs in the long run.”
comments powered by Disqus
Arnold Shcherban - 2/15/2009
The conservative right-wing mass-media is screaming in full lungs: European socialism is coming. This claim is as deceptive and fraudulent as it gets.
Its task is obvious: to pass myth for reality.
What actually happened and will continue to happen, according to the both TARP and Stimulus package, is the greatest redistribution of wealth from public to private capital, i.e. legalized robbery of American lower and middle middle-class taxpayers by Big Business and Finance, in the history of mankind.
What a rubbish I'm saying, right?
Well, let's look at the facts.
The $350 Billion of TARP money lent to the private banks has already dissappeared in nowhere-land without
anyone in the government pressing those banks for full disclosure where and how that enormous amount of money was spent (not mentioning at least partial return of the loan)!?
According to the new so-called Financial Rescue Plan, the rest of $350 Billion are given again to private banks, even though some of the recipients are unwilling to accept them!? Yes, some conditions and provisions are attached now to the second half of that Rescue package, but they are not only timid and untimed but - what's more important - don't change the direction of the gigantic wealth redistribution flow established by TARP.
The so-called Economic Stimulus Package assigned nearly 10% of the amount as tax cuts to upper-middle class taxpayers, i.e. affluent folks, which are doing fine so far, especially comparing to lower and middle middle class people who suffer the most over current economic recession.
But what about that huge "government" spending the con artists from the right pour crocodile tears about?
Well, guess whom those construction, energy, and most of the other kinds of projects envisioned by the Stimulus Package will be given to by the states and Feds? Of course - to the same private companies and corporations, and not to some of those but to the Big Ones (since they are most established and trustworthy, right?)!
- Nelson Mandela Dead: Icon of Anti-Apartheid Movement Dies at 95
- George H.W. Bush Given Lyndon B. Johnson Foundation Award
- Bruce Springsteen's 'Born To Run' manuscript could fetch $100,000 at NY auction
- Hospital Donates Records of Jacqueline Kennedy Onassis to JFK Library
- Australia’s Eureka Flag Finds a New Patch