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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (478054)	5/5/2009 4:29:43 PM
From: Road Walker	Read Replies (1) \| Respond to of 1575761

You're assuming that if banks "went bankrupt" they would stop functioning altogether, which they, of course, wouldn't. Transfers of money would still happen just as before, paying and receiving, just as before. And even some lending would still occur -- it might just be more conservative. I didn't bring up BK, that wouldn't be an option and that wasn't what was happening. The banks suddenly realized that most among them were insolvent, and no longer trusted each other. You ever done importing? Imagine no more letters of credit. Imagine if BOA won't clear a check from Citi. Credit markets are important, but in the short term -- e.g., commercial paper, there are other resources than banks. Who do you think handles commercial paper. It was frozen. When you say "No import, no export" -- that's a bit of an exaggeration. There are still motivated sellers and buyers, and the fact that credit markets are disrupted does not imply they can't find ways to make business happen. Yes, it does. And when the banks collapse, you think people are going to trust each other? There is a very good reason the Fed and Treasury panicked.

To: i-node who wrote (478054)	5/5/2009 4:39:14 PM
From: combjelly	Read Replies (1) \| Respond to of 1575761

"You're assuming that if banks "went bankrupt" they would stop functioning altogether, which they, of course, wouldn't." Sigh. It depends on the country. In many countries, BK means the company is dissolved. " When you say "No import, no export" -- that's a bit of an exaggeration." No, it isn't. Late last year the Capemax ships almost ground to a halt. Capemax ships are the 100k+ ton capacity ships that move things like grains, iron ore, coal, etc. The reason why they stopped moving was that the banks no longer trusted letters of credit for those large amounts. Without the letters of credit, no shipments could be authorized. "There are still motivated sellers and buyers, and the fact that credit markets are disrupted does not imply they can't find ways to make business happen." Some countries resorted to barter. Iran, for example, struck some deals to trade oil for rice. But, you can't effectively run international trade on a barter basis. Which is why it was dropped centuries ago.