Quote: At first glance, anyone who understands economics can see that there is something wrong with this [bailout] picture. The taxes that will need to be levied to finance this package may keep some firms alive, but they will siphon off capital, kill jobs and make businesses less productive elsewhere. Increasing the money supply is [...]

“The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.
Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving [...]

Amid all of the other news of the day, the bailout that did not pass, at least today, and the markets that were expecting passage of the bill which fell sharply (DJIA falls by 777 points), there is also news of a loan guarantee package for US automakers. It would evidently include not only [...]

“The FDIC in a press release stressed that Wachovia did not fail. Citi will take the hit for up to $42 billion of losses on a $312 billion pool of Wachovia loans, while the FDIC will take responsibilities for additional losses. It granted the FDIC $12 billion in preferred stock and warrants for assuming the [...]

The Federal Reserve has announced that it will again make more and more money available for “cash starved banks” both here and abroad (?!). This continues and expands again the same policy that the Fed has been pursuing for months. One could gather that so far this policy has not worked as it [...]

In yet another weekend deal, it has been announced that Citigroup is buying the banking part of Wachovia, in exchange for taking a percentage of its bad loans, with the FDIC covering its other losses. “Citigroup also will issue $12 billion in preferred stock and warrants to the FDIC.” In these deals which [...]

It is hard to get much of an overview on a crisis while it is happening. That is why I read and link here to multiple articles with differing view points. Here is another opinion from E. J. Dionne, Jr..
“The simple truth is that Washington is petrified about this crisis and will pass [...]

“It is a tale of two systems. One system, the one used to process failed and faltering banks, works really well. It’s been in place and evolving for 75 years, since the Federal Deposit Insurance Corp. was founded (over the opposition of bankers, it must be added). Since then, not a penny of depositors’ money [...]

“… This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national [...]

This is the largest bank failure thus far. “The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift’s banking assets to JPMorgan Chase & Co. for $1.9 billion.
Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country’s history. Its $307 billion in [...]