>> Interbank lending rates have been very high, but again, it's not so
>> much about price but availability. The interbank market has essentially
>> frozen. If you're going to debunk the MSM, you should hold yourself to
>> higher standards.
>>
>> Doug
Yes, this is important. Folks, the economy has tons of problems, but the issue right now is that interbank lending has stopped. This is not a fake crisis. It's the equivalent of a massive heart attack - liquidity ain't flowing anywhere in the US. This can't go on much longer, or THE REAL ECONOMY WILL IMPLODE. This is damn serious stuff.
The Europeans are doing the right thing: taking over banks and recapitalizing them with public funds (i.e. adding to their deposit base). We need to do the same. Fast. It's going to take a lot of money, at least a trillion dollars, but that's preferable to a total meltdown. Not sure what Dean is thinking, but the unified message all progressives should be shouting is:
(1) Take over the banks, not their bad assets, and shore them up with public money, RIGHT NOW. (2) The FDIC needs to guarantee all deposits, up to their full amount, RIGHT NOW. (Roubini suggests a six-month sunset clause on this, which makes sense to me).
If this gets done, then we can move on to disposing of the bad debts, helping homeowners, boosting consumption, etc. But first we have to treat the heart attack.
-- DRR