[lbo-talk] Geithner clarifies

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Tue Mar 24 09:30:27 PDT 2009


Shane Mage writes:


> Since Jordan is so certain that this "Swedish" approach "will not
> work," it should be very easy for him to do what the Obama
> administration is so plainly unable to do:
> EXPLAIN WHY ITS APPROACH IS BETTER.

If you want to change the subject (by screaming) go ahead, but I'll just say *again* that I'm not advocating an alternate position here (I'm not even saying I know whether or not the current administration plan will work), I'm just saying that insisting that "take over insolvent banks" *is* the solution (or even ascribing vague notions of "power" to why that solution isn't being taken) brings up some very problematical technical issues. They've been lovingly explained (or EXPLAINED) almost a month ago right here on this list and the response has been nil.

I love the beauty and simplicity of your explaination of the Swedish Solution, starting with "insolvent banks should be taken over by the government" ... the FDIC has their hands full of this kind of behavior on a daily basis, and will continue to do so. The FDIC, in fact, is the worldwide standard-bearer of how to technically take down a bank. They are pros at it.

What I object to is this hand-waving that says "See! It works for tiny banks, now go apply it to Citibank!" ... I think it's up to you all who say this to explain why it is that this solution scales to Citibank and Bank of America. Because I don't think it does.

/jordan



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