a. acknowledge that there are huge losses- mortgages, car loans etc.
b. require that these losses be recognized by the lenders.
c. decide how far up the debt ladder the losses go e.g. are depositors at banks going to be forced to take hit, policy holders at insurance companies.
d. Nationalize the banks and make all deposits essentially government guaranteed.
e. go back to business.

The problem here is ideological not economic. The right hates the idea of government involvement, the left is too scared to challenge them and everybody wants to protect the fats cats rather than the average joe.

I think we all know where this ends, and it isn’t going to be pretty.

May God have mercy upon us.

The peer-reviewed medical literature has now conclusively established that IMF loan conditionalities cause large amounts of premature deaths around the world.

Should anyone doubt this, I refer them, for starters, to the comprehensive study earlier this year published in The Lancet, the most respected medical journal in the world, that conclusively proves this assertion.

Matt Dubuque
mdubuque@yahoo.coms

To: AndyG:
I applaud you for maintaining a small modicum of optimism, but would ask you what hasn’t “defaulted” in the last 10 days / 7 months? It seems to me that every financial instrument has become grist for the “default mill”. I think your “if” is more like “when”, and that your “storm in a teacup” is more like a worldwide Cat 6 Typhoon. Wish it weren’t so.
Earl

There is much talk about the Scandanavian model for dealing with a banking crisis.

And, perhaps it is not just talk. It may be true.

But, the problem now is that we have a Shadow Banking crisis.

Scandanavia did not have to deal with a Shadow Banking system.

The Scandanavian model will not work here.

It will only work after every relevant Government in the world agree that all derivatives are VOID.

The Shadow Banking system must DIE.

All else if futile.

Just a thought.

A GM CDS trigger could expose a lot of players. Having said that if we get past the LEH CDS event without any major waves then perhaps the whole CDS thing could turn out to be a storm in a teacup.

http://www.economist.com/blogs/freeexchange/2008/10/boom_goes_the_cds.cfm

Hmm… I don’t have the numbers in front of me, but supposedly even as far back as Aug 1st, GM CDS premiums were at 40%+.

In other words, isn’t a default basically “expected” at this point?