Tuesday, July 01, 2008

Let the Banks Go Under, Sell 10 Million Houses for $1 Each

From Charles Hugh Smith:

Today's target: the notion that the collapse of the insolvent U.S. banking system would be so terrible. Really? Terrible for who? Certainly not the nation at large.

In fact the dissolution of the insolvent parts of the U.S. banking sector--yes, the investment banks, the money-center banks, the regional banks, and the savings and loans--would actually be an enormously positive development for the nation and indeed the world.

Let's start with the fact that a huge number of these lenders are insolvent. If all their bad loans, bad derivative bets and off-balance sheet losses were forced to be marked to market/liquidated to raise capital, then major bank after major bank would fold/enter bankruptcy.

And what exactly would be so bad about that? Businesses go under all the time. The truth is these banks will never ever recover the loans they wrote, so why try to prop them up with taxpayer funds? To bail out the ultra-wealthy owners of those banks, of course.

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2 comments:

helen said...

It's a nice dream to think this would happen, but I doubt the government will allow the banks and all the "fat Cats" to go under even though they probably should. As always the only people who will suffer the consequences of all these bad debts and loans
is the normal hard working people who's only real crime was trying to get a better life. Ok some people wasted their chance with excessive spending habits etc, but many who have worked hard to better themselves risk uncertain financial futures.

Double Jointed Fingers said...

Helen, it's still going on today. I am a legal assistant and the mortgage brokers are still trying to sell suspect mortgage packages to the unaware people who only want to own a home.

There should be mortgage advocates out there that set down with these people and tell them the REAL story because the Banks/Lending Institutions will never explain it to them so long as they make a buck.