No foolin’ — you simply will not be able to understand what is going on nationally or locally without reference to the information and ideas advanced in these three very different perspectives.
First, from on high. Robert Higgs makes what should be the obvious point that you cannot fix an over-extension of credit with — yet more credit. Yet the gnomes at Treasury want to hand out below-market interest rates in order to entice folks to take on dicey assets. Utterly insane. Throwing money out the door does not establish a market price for these assets — especially if that price should be zero absent the government subsidy.
Next, an actual real live banker blows up the myth of TARP. U.S. Bankcorp CEO U.S. Bancorp Richard Davis explains that 1)The feds forced him to take billions in bailout money 2) Expected him not to lend it out, as it the cover story, but to buy up weaker banks. Within hours, of course, his PR flacks were trying to retract Davis’ candor. But he makes too much sense. More from his comments in Minneapolis:
“Bankers are dream makers,” he said. “We don’t make anything. We don’t build anything. We don’t fix anything. We don’t break anything. We get behind everyone who does.” … “That’s why this city will continue to come through this difficult time better than almost any major city in America,” said Davis, who came to Minnesota from California. “We didn’t get into the stupid stuff two years ago that would have impaired us from doing the normal stuff today. So there.”
So there. Ken Lewis. Ken Thompson. And what are our local dream makers dreaming up, besides a way to save their own asses?
Finally, the most challenging and damning piece. We’ve said for eons that Chris Whalen and Institutional Risk Analytics have been way ahead of the curve. Here’s IRA’s latest featuring Martin Mayer and Nouriel Roubini with some impossible to summarize insights. I will say that Roubini says that Citi and BofA are “obviously insolvent” and that a happy landing for Wells-covia depends on a turnaround by Q3.
I know that John Silvia and other smart folks think that will happen, that by summer we’ll see a turn. Little ol’ me, I gots my doubts.
