Mises Ins ute: The Insolvency of the Fed

[RandomGuy]

Why not offer the field to the banks that have managed their assets prudently and still have good balance sheets? So there will a really big hiccup if we declare default and impose receivership. Whenever the dust clears, the very best run banks will go back to work. Let's declare default and get it over with. Let's burn a bunch of bad paper, tell the creditors to off, and give all the bondholders a haircut. Let's ing get it over with. Done right, we only have to do it once.

This will sorely punish the shareholders of the banks that go under, making it harder for even well-run banks to raise capital.

On the other hand, it will make those who are brave enough to buy bank stocks again a of a lot more active when it comes to corporate governance. If I bought a bank stock, I would sure as want some gaurantee that my company was run with a prudent risk strategy.

Users will migrate to other ins utions if the banks get too greedy, but I can totally see that RG.

We'll see how it ultimately pans out.

[Winehole23]

This will sorely punish the shareholders of the banks that go under, making it harder for even well-run banks to raise capital.

Whereas I would put the accent on protecting taxpayers. I am not unalive to the question of systemic risk, but the cui bono question makes me wary to conclude, and ad hoc measures so far have failed to restore, ahem, *liquidity*.

It would seem to me that insolvent banks pose a systemic risk if default is *not* declared. Repeated bailouts to avert systemic risk may wreck the creditworthiness of the USA somewhere down the line. For damn sure they do not inspire confidence, but only (putatively) avert catastrophe.

My question is this: at what point does the government say no more?

Weren't they supposed to say "no more" well before there was any substantial risk to taxpayers?

[TDMVPDPOY]

My question is this: at what point does the government say no more?

Weren't they supposed to say "no more" well before there was any substantial risk to taxpayers?

i say the s up there and the morons who aint doing their jobs overseeing the operations of these banks are running properly, ethically, following the rules of conduct/trade, and any regulations are met.

im not a shareholder in any bank, why should my tax money be spent on bailing out these involvent banks. The morons who supposed to be bailing out the banks are the shareholders who own a share in them, theres a thing called capital raising . I dont have a infested interest in these banks so why me? if this is how the govt is going to operate, everyone might as well pull out all their deposits and dig a hole 6ft underground and hide it there.

[Winehole23]

i say the s up there and the morons who aint doing their jobs overseeing the operations of these banks are running properly, ethically, following the rules of conduct/trade, and any regulations are met.

That's pretty hard to argue with, TDMVPDPOY.

im not a shareholder in any bank, why should my tax money be spent on bailing out these involvent banks.

Just put the word insolvent in front of banks. It's just starting to catch on. More people need to find out about this.

The morons who supposed to be bailing out the banks are the shareholders who own a share in them, theres a thing called capital raising . I dont have a infested interest in these banks so why me? if this is how the govt is going to operate, everyone might as well pull out all their deposits and dig a hole 6ft underground and hide it there.

I'm starting to think a little more like you. I'm building a garden in the back yard. My next investment is homebrew equipment.

[Winehole23]

Just put the word insolvent in front of banks. It's just starting to catch on. More people need to find out about this.

Replaced by a snooze bar. Carry on.

[Winehole23]

More snooze bar. The banks may fail anyway.