Because it isn’t working.
The TED broke 400 this morning. The credit situation is NOT improving, it is getting worse.
For all the blovation I see from “conservatives” here on FR railing against “socialism” — that is exactly what is needed just now. The government needs to seize banks, throw the management out of unopened upper story windows, and then go through the balance sheets (and what isn’t on the balance sheets) and get the situation cleaned up NOW. Not this “let’s give them an option to sell us the crap paper.” No, the government needs to inject liquidity in sufficient quantity that the Treasury gets a seat on the board of directors, and gets senior preferred stock with punitive yields, as well as warrants or options to purchase the common when share prices go back up.
THE central problem here is that NO ONE trusts any other bank. That’s what a TED of 400+ tells us and the high LIBORs are telling us.
The European nations are having to seize banks in order to clean up the mess. In a short time, those banks will be more trusted than US banks, and capital will flow there first, leaving us with as big a mess as we have now.
This has become a global race to see who can get their banks cleaned up and trustworthy enough to attract deposits. We’re not winning. We’re not as bad as, say, Iceland, but we’re not winning yet. We’re merely losing less quickly than the Euro zone.
There is a precondition for this: Fire Hank Paulson. Keep any other Wall St. hack to run the Treasury show.
I knew there was a catch to those 14% Icelandic CD’s EverBank was peddling a few months ago.
That's bad, but what's REALLY sobering is the LIBOR/OIS Spread. It was sitting at 321 bp last I checked. That blows away previous records.
Unless the Fed and the government are helping to coordinate this collapse..
I'm not a conspiratorialist, but the Fed and government haven't made a correct move yet in this mess.
It's sobering to think about....but what if?
This was done in Nazi-era Germany - without very good results.
“For all the blovation I see from “conservatives” here on FR railing against “socialism” — that is exactly what is needed just now. “
Wrong answer. Socialism caused this mess in the first place. If the banks have done something illegal then it is the job of the government to prosecute them. The government FORCED the banks to loan money to people incapable of paying it back.