The Survival Podcast Forum

Finance and Economics => The Money Board => Economic News, the Global Economy and all Things Monetary => Topic started by: Stein on January 28, 2009, 10:11:52 AM

Title: Soros: 'Bad Bank' for Troubled Assets Is Bad Idea
Post by: Stein on January 28, 2009, 10:11:52 AM
http://finance.yahoo.com/news/Soros-Bad-Bank-for-Troubled-cnbc-14181833.html (http://finance.yahoo.com/news/Soros-Bad-Bank-for-Troubled-cnbc-14181833.html)

Quote
"That (the "bad bank" proposal) will help relieve the situation, but it will not be sufficient to turn it around," Soros said during a live interview at the Davos economic conference in Switzerland. Instead, Soros said he would create a "good bank" and re-capitalize the good assets.

He admitted his alternative plan is not likely to get support because it too closely approaches nationalization. "The political will to do that is not there," he said.

There aren't many people I like less than Soros, but I gotta give a man his due when he is right.  There are only two options that are even remotely related to long-term solutions.

1.  Let banks fail, private equity will pick up the pieces and we will move on.

2.  Nationalize any insolvent bank, bust them into pieces, sell the good and the taxpayers will pay for the rest.  This isn't socialism as the nationalization is temporary - only long enough to bust them up and spit them out.

Regarding 2., realistically we are on the hook anyway (bailout, loans and guarantees even up until this point) so it is actually less expensive as we don't have to pay for all of the waste and earmarks in the bailout packages.
Title: Re: Soros: 'Bad Bank' for Troubled Assets Is Bad Idea
Post by: chris on January 28, 2009, 10:38:21 AM
Unless there's some provision to end fractional reserve banking and the FED, this will accomplish nothing. We'll be back here in another decade to do it again. The system is the problem.