When will we stop throwing good money after bad?

Posted by Joel Friedlander | 1 Comment

Ben Bernanke wants to pour more of the public’s money into the banks. The argument is that the economy will not survive if the money isn’t spent on the very people who created the credit crisis in the first place. More money is to be spent on banks that have taken everything that the government has given them and kept credit nonexistent. This is rank foolishness.

What Bernanke should be saying is that if more money isn’t poured into the banking system it will not continue to exist in its previous form. That would be the truth and a further truth is that it shouldn’t continue to exist in its current form. We must bite the bullet and allow those banks that are going to fail to fail. They killed themselves with their uncontrolled greed, corruption and stupidity – yes, buying packaged securities whose value is unknown is stupidity for a bank – and must be allowed to die off in a nice regulated way. We call that regulated way Bankruptcy.

There is nothing sacrosanct about banking workers that entitles them to survive when workers in the entire economy are losing their jobs. There is going to be a jobs program and let them line up for work. The reason why this program is so unpopular with the general pubic of the United States is that it is grossly unfair, AND it is GROSSLY unproductive of the results intended. The banks took the money from the government and did nothing with it. Now they are screaming for more and they will take that and do nothing with it as well. There is no cure for the poison securities on their books except for them to go out of business and let the investors lose their money. There is nothing sacred about the investor class except that they have bought the Congress with their donations. It is time to let them fail and allow for a restructuring.

ALL OF THE BANKS WILL NOT FAIL. There are thousands of very sound banks across the country that will take over the positions held by the failed banks. The society will not fail, only part of its structure will be reorganized. It is time to let the reorganization to begin. The Japanese coddled their banks and had ten years of recession. Do we want that to happen or will we let the rich and politically generous go down to well deserved failure. If anything is to be learned from our previous stupidity as a society, the creators of this crisis must be weeded out and others, who are untainted, must take their places.

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