Indeed she nails it..... Banks are a lot like the mining or oil business.... There may be oil in the wells.....and there may be gold in the mine..... But how much is anyone's guess.... .................................................... However......let us not make this more complicated than it is.... One would know more about how much gold there really is.....if all instruments traded on a public exchange..... Furthermore....30:1 leverage is self explanatory.... .............................................. This is proof positive the two party system does not work..... It can be further argued that the two party system by advertising needs to be dismantled and replaced..... ........................................................ Governance by township 10% consumption tax Banks....discounted asset based lending, managed locally..... Worldwide, Open Direct Access Stock Exchange...Short and Long....Max 10:1 leverage, no min accts.... Boilerplate for entrants..... ....................................................... Implement the above, the free market will do the rest.... ................................................ Target.... Minimize government in everyone's lives by 2010.....
Winnar Winnar Chicken Dinnar! Yes, i spelled those wrong....Gotta add a disclaimer for all the grammar and spelling nazi's on this site
Thanks for posting that link. This is the primary reason why I visit ET, because a lot of guys post links to great material that I otherwise would not have encountered. Anna has a very wise and sharp mind at 92. I have zero confidence that Paulson and Benanke will deviate from the current plan of punishing good bankers and rewarding bad bankers. Richard Kovacevich (CEO of Wells Fargo) is the most responsible banker in America right now. And he was punished by being forced to accept taxpayer money he didn't want, ask for, or need. He saw his shareholders get diluted as punishment for his most responsible behavior. I don't know how that type of Fed response to this crises can inspire any confidence. I want to see Kovacevich as the next Treasury secretary.
She is spot on with the explanation of this liquidity/trust crisis. But we all know that the real culprit is an institution that she avoids criticizing (or she does it with a little slap on the wrist). Yes I am talking about Federal Reserve.
Her comments are incongruous. Bad institutions should be punished. Okay Lehman was allowed to fail right? But she says by that time there were too many ad hoc interventions and the message the government was sending was unclear. Ask the investors in Bear Stearns if they didn't feel punished. She also says the problem at hand is one of solvency and not liquidity therefore actions by the government are not addressing the issue. But that's what possible injections of capital into banks are for isn't it? To strengthen the balance sheet?
it's in my best interest that we see an inflation rate of 18%-23% for the next three years hyperinflation isn't good for me, but it's still acceptable
Here is a poor old soul who has long drugged herself on simple solutions and simple understandings. The reason to save banks is to help restore confidence. You can't let banks fail and explain that insolvent banks should die. In effect, apart from Lehman, there have been no bank failures/bankrupcies because the Federal Reserve has had other banks take over failing banks. Dear Old Granny can no longer learn.