Krugman isn't fit to run a child's lemonade stand. No wonder he's such a "respected" academic economist.
So what is the solution?As I explained in a language that even a child can understand the NATIONALIZED US bankruptcy system doesnt handle banks. Allowing C to go into FDIC's(temporary nationalization) hand for reestructuring and clean up is the equivalent to bankruptcy, what you government bashers want to happen here
-Flat sales tax -No federal tax -No capital gains tax -No corporate tax and US of A will become again a financial and industrial superpower in a few years.
Daal, after this weekend I am convinced that there are an awful lot of people here on ET these days that should just be put on IGNORE. Believe it or not, I had a guy named Cutten and another guy named Smilingcynic make the case that Family Trusts/Estates should not be allowed to "escape" paying taxes because the family members were simply "lucky" to inherit the money from their parents, and never did any hard work to merit such inheritance. In otherwords, they had ZERO problem with the government subjecting you to "double-taxation". It was truly a new low, even by ET standards. Here is the thread: http://www.elitetrader.com/vb/showt...4682&perpage=6&highlight=estate&pagenumber=11 Feel free to read the next 3 pages of it and let me know what you think. Unfreaking-believable!
The cows have long been out of the barn, my friend. Personal Acccountability you say? An interesting concept, but I believe that it is based on the assumption that laissez-faire Capitalism "self-regulates" and that there are not any "distortions" in the marketplace. And as we all know, that is terribly FALSE.
I have read sources claim BAC and C have +6trillion in toxic CDS exposure by themselves. Add a couple of trillion from the rest to that and perhaps the problem is 1) much larger then even perceived by the biggest bears and 2) truly unfixable. Don't know where this puts us as a world but we are in for some interesting times to say the least.
According to the free market nughuggers there is ZERO difference between something like WebVan or Worldcom going bust and Lehman, AIG and BAC + a bunch of emerging markets going into unmoderated bankruptcy. Even in the aftermath of Lehman they still hang on to their "self-cleasing market" thesis. Shouldn't most traders understand that markets tend to swing back and forth between being efficient and non-efficient?
True, in the current form(government comes in at the same level as pref) they are getting an windfall. On the FDIC scenario they only get something if there is a systemic issue otherwise they get the WM scenario of getting wacked I'm arguing for nationalization but I could get hurt if C bonds dont have a systemic issue, so I have an incentive to continue the current bailouts because they hurt equity a bit and help bonds