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Politics : THE WHITE HOUSE
SPY 680.44+0.6%Dec 19 4:00 PM EST
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To: GROUND ZERO™ who wrote (23799)10/13/2008 12:29:03 PM
From: DuckTapeSunroof  Read Replies (1) of 25737
 
I agree.

Now that Europe has weighed-in with really big bucks to bail-out their banking sectors... and the Bushie's are backing away from their original silly idea of 'overpaying for bad paper to rescue financial institutions', and are coming-round to the classically successful ideas for rescues of banking panics, (as the Sweden rescue from 1990 demonstrated):

This involves several steps:

1. Injection of equity capital into the banking system;
2. Providing confidence in the banking system to investors by providing transparent marks to illiquid securities;
3. Taking equity stakes in firms that are strong enough to survive and liquidating those that aren’t - this helps to remove moral hazard because there is a serious price to pay if you want to remain in business and you are a financial company;
4. Providing incentives to banks to lend their newfound capital.

clevelandfed.org
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