(Or at least one that is Safe For Work.)
From John Cole:
You're in a room with 100 people, and 20 of those people have a deadly disease that is spread by touch. You have no idea who the 20 are, so your strategy is "touch no one".
The banks have no idea who is toxic and who is not, so lending has frozen.
According to John, "Someone better give them some liquor and antibiotics and they better start touching each other soon, because 120 billion in a few weeks to AIG alone is terrifying."
I guess the good news is that -- according to this article -- the US seems to be waking up to the need to just nationalize part of the banking system to help it get over its current outbreak of psychopathological agoraphobia.
Never before has the Fed issued an announcement on interest rates jointly with another central bank, let alone five other central banks, including the People's Bank of China. . .The idea is gaining support even among longtime Republican policy makers who have spent most of their careers defending laissez-faire economic policies.
"The problem is the uncertainty that people have about doing business with banks, and banks have about doing business with each other," said William Poole, a staunchly free-market Republican who stepped down as president of the Federal Reserve Bank of St. Louis on Aug. 31. "We need to eliminate that uncertainty as fast as we can, and one way to do that is by injecting capital directly into banks. I think it could be done very quickly."
What's next? A massive mortgage refinancing scheme backed by even more billions of taxpayer dollars? This US News story from October 3 says that the plan McCain "introduced" to no fanfare at last night's debate has actually been kicking around former conservative thought leaders for a while.
In the Wall Street Journal yesterday, former White House economist Glenn Hubbard offered a $400 billion to $600 billion plan through which the government would refinance all U.S. mortgages into 30-year fixed mortgages at 5.25 percent through Fannie and Freddie. And just the other day, I talked to another prominent conservative economist who suggested a somewhat similar plan. I asked whether all these plans didn't smell of socialism. The economist's answer: "I think that bridge has already been crossed."
They're calling this new brilliant idea "the son of the mother of all bailouts." Perfect title to go with this horrorshow.