Mark my words. There will be a bailout. I’m calling out your bluff congress!
Don’t get me wrong. I am fully aware of the moral hazard that is the bailout, but now is not the time to be limp-dicked about the situation. The major banks shouldn’t have taken on so much liquidity and interest rate risks in the first place, and the argument goes that if the government bail them out this time, the banks will continue their high risk high reward ways.
But lets say… your best friend ventures into the black forest by himself one night against your advise. He calls you on your mobile, saying, dude! i’m surrounded by fucking bears! help! Now… do you tell him, no fucking way man, if i rescue you now, you’ll just take my advice for granted again and get surrounded by wolves next time? No. you shoot the motherfucking bears, then AFTERWARDS, you beat the shit out of your friend for being a dumb ass.
The current financial crisis is being described as the 100 year storm. It’s like being surrounded by bears. The banks have taken on so much leverage against each other that if another major counterparty fails, all could fail. The right thing to do, in my opinion right now, is to metaphorically kill the bears. The banks need to stay afloat long enough for deflationary pressures to go away. b/c trust me. deflation is a LOT worse than inflation. imagine the great depression. 30% unemployment. Russell Crowe comes to America, becomes a boxer, and kicks your ass.
This current crisis is still a baby, market decline hasn’t reached 1987 levels yet, so maybe we still have time. I’ve seen many comments such as… down with the rich asshole bankers, or, die entitled rich asshole bankers! but, if the banks fail, we will all be affected. No investment funding means no business funding, means no money for businesses to pay employees, means you’re out of a job. Punishing bankers immediately will be a lot easier if we were all disconnected somehow, but the truth is, we’re not. So my point is, kill the bears first, THEN kill the bankers.
Thoughts?
September 29, 2008 at 7:35 pm
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