tag:blogger.com,1999:blog-9612609.post804210813850599984..comments2023-09-29T06:58:20.125-07:00Comments on Badtux the Snarky Penguin: Money, inflation, and why we want some (but not too much)BadTuxhttp://www.blogger.com/profile/01345749557330760251noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-9612609.post-55543149169947166442009-04-26T21:57:00.000-07:002009-04-26T21:57:00.000-07:00A banking system is needed. These specific banks a...A banking system is needed. These specific banks are not necessarily needed, however. Indeed, arguably private banks aren't particularly needed at all (though as a practical matter I'd prefer to have some, just not run by the current bunch of people).<br /><br />I would also argue that 2% inflation is too low. Given a choice I'd go for about 4%. 2% puts too many sectors of the economy into real deflation.<br /><br />Overall, however, agreed.Unknownhttps://www.blogger.com/profile/05686983280645481272noreply@blogger.comtag:blogger.com,1999:blog-9612609.post-5145659085493323272009-04-22T15:17:00.000-07:002009-04-22T15:17:00.000-07:00Forced bankruptcy or nationalization. Those are th...Forced bankruptcy or nationalization. Those are the only two alternatives left. My take on the Geithner plan is that it is intended as part of the plan of saying to Congress and the American people, "look, we tried everything else, this is all that is left." I.e., the Obama team building political support for nationalization or forced bankruptcy. Will it work? Of course not. It's far too small for that. But more on that in another posting.<br /><br />- Badtux the Economics PenguinBadTuxhttps://www.blogger.com/profile/01345749557330760251noreply@blogger.comtag:blogger.com,1999:blog-9612609.post-51523665610433260112009-04-22T15:13:00.000-07:002009-04-22T15:13:00.000-07:00My Frosty Friend,
How do we keep banks solvent wi...My Frosty Friend,<br /><br />How do we keep banks solvent without the taxpayer underwriting the losses of the burst housing bubble?<br /><br />Consider that the banks seem to be keeping the bad assets off the market. (Previous post - your site)The banks will have no incentive to put assets up in a garage-sale auction (Geithner plan) since no hedge fund is going to bid these troubled assets at anything close to face value. (Where the troubled assets are most concentrated, the real estate prices have fallen 20% or more.) Face value seems to be what the banks are valuing this junk at. (Last month Fed rules allowed banks to use creative standards in valuing this crap on the books.) Unless the Geithner plan is a Trojan horse intended to allow the banks to slough these off on the taxpayer at face value with the intention the hedge funds will be unable to move them. (God, I hope that's not the plan.) But how the hell is this supposed to play out?TampaDoughttps://www.blogger.com/profile/12927689342520971279noreply@blogger.com