This bear market is no different than any other in the history of bear markets. When bear markets happen prices go down, and in the worst sectors prices go down more than anyone would have ever thought possible. The only difference between this one and others is that the effected sector is well connected so they can go whining to DC and get "help" from the government.
notice how no-one actually gives an answer, just snobbish/snide remarks....... money is just a con game - face it. the money is a bunch of 010101s in a computer, the money doesn't even EXIST so, if every govt just makes more "money" and bails out the debt, whats the difference, as long as the public approves the move, it will work.
There is somewhat of a precedent. At the end of WWI - all the allies defaulted on the debt owed to the US - all execept Sweden I believe. Anyone else know the details? Time for payback?
Because every piece of debt equals an asset. The reason the 700bn bailout exists is because the banks don't want to write the debt down to market prices (which are actually assets on their books), if they did that they they would not meet their capital requirements under the Basal Capital Framework which all banks follow. So you can't just wipe out all the debt in the world because you are wiping out a corresponding amount of assets. Remember assets = liabilities
agreed if the global financial system does collapse like everyone here thinks then who needs cash anyway it will be worthless, might as well own a bunch of stock certificates than a bunch of worthless paper.
good one. this is actually exactly what is happening already. close to trillion was already created. Illiquid assets are being substituted by monetary base (via discount window) which should! be used to prompt liquidity (read money creation). the fact that it does not work is the major reason why fed funds trade below the target... other guys on this thread should take econ101.
not exactly Total assets will always equal total liabilities plus total equity so you wipe out the liabilities by adding the equity... banks wont lose a thing, assets will remain the same, except now they got lots of equity.... so like i said, just create the equity out of thin air and lets be done with this, why won't it work? it will work IMO as long as everyone does it, and specs/public have nowhere to run and hide, all have to eat their inflation pill at the same time. and BTW I have lived in a country with 10 years of 15% yoy inflation, and it wasn't that bad, i think its WAY better than deflation / no credit.