This does not seem to me to be a federal problem. Let the cities in which they reside, or at worst their states, bail them out.

With all due respect, I have reviewed the postings and comments here. Yes, there is some discussion of the ongoing bank manager lending strike. But the only (!) comment addressing stronger intervention within the banks themselves–that is, available policy for the US Govt–is a historical aside by Yves in the 10/18 ‘parallels with the 1930s’ post:

“In the 1930s, the government had another major lever, however, to get credit markets going again in the 1930s. RFC preferred stock, unlike the preferred shares that Treasury is going to buy today, came with equal voting rights to common. The RFC exercised this to put its own managers in place at major financial institutions. The result was a distinctive type of state-capitalism. Arguably, Treasury might have done better to take preferred stock that would give it stronger control over bank management.”

I do not accept the premise that the discussion here has “covered” the topic that Joe Nocera and Bloomberg News are ripping th lid off of. There is a big difference between speculation about the logic of bank actions, and actual ’smoking gun’ evidence of their immediate intent. An occasional unsourced bank executive quote is not investigative journalism.

Furthermore, the connection between the bank lending strike and the consequences for the real economy are not made with any sense of urgency. Urgency as in what can be done, and the option of government entering directly into bank managements’ offices.

Mish’s Global Economic Trends had a nice post considering, but dismissing the idea of “forcing banks to lend at bazooka point”. I happen to disagree but at least it was openly discussed.

Please do not dismiss the evolution of public opinion on this topic. You should understand that the intelligent role of the blogosphere could constructively shape the debate. But this is so only if you continue to pinpoint the mechanism by which the credit crisis can cause a new depression, and policy options to prevent same. My position is that bank lending policy must be affected by actual, i.e. in person interventions into positions of authority in the banking system. I challenge you to show that there has been any serious discussion about this option.

Sure, there is plenty else to discuss and you do an admirable job. But the nearly silent free fall of the real economy can be mitigated by federal policy, and this should be one of the highest priorities under discussion.

Thanks

Why does Fed changing rates paid on excess balances mean Fed had lost control?

Thanks.

Just because I do not comment frequently does NOT mean I am not reading! I have taken note of your Large Hadron Collider musings, for instance.

The other Dr. Doom, Marc Faber, is apparently a wild man too, but the original (Henry Kaufman) is not. Times change….

I think the time has come to discuss The Roubini Plaster Vulvas, as it seems to be within the context of free association and by the time Yves gets around to reading comments, this will obviously be an old footnote…

I bring to your attention, exhibit A:

Sigmund Freud
http://en.wikipedia.org/wiki/Sigmund_Freud

In 1876, he published his first paper about “the testicles of eels” in the “Mitteilungen der österreichischen Akademie der Wissenschaften”, conceding that he could not solve the matter either. Frustrated by the lack of success that would have gained him fame, Freud chose to change his course of study. Biographers like Siegfried Bernfeld wonder if and how this early episode was significant for his later work regarding hidden sexuality and frustrations.

See Also: The Secret Pleasures of Dr. Doom

http://gawker.com/5063337/the-secret-pleasures-of-dr-doom

To be continued…

This latest post on total bank capitalization is the first turn of events in recent weeks that I have not been able to follow. Will someone please explains the fundamental issues here in a simple way, if possible. I know economics, but not the ins and outs of banking and finance — beyond fractional reserves, open market operations, etc..

Thanks,

Luke Lea
BornAgainDemocrats.com
luke.lea@gmail.com

Google thinks finance geeks like porn.