Friday, September 19, 2008

A Really Good Point

In the previous thread a commenter noted:

your ideological opposition to the idea of govt taking over banks is, i think, blinding you to the fact that in past instances (most notably the New Deal), such temporary takeovers have succeeded in stabilizing the banking system at least cost to the taxpayer.

This is a very good point and one that needs to be seriously considered.

Right now the system is more than "unstable". It is in chaos as traders wait for the next shoe to drop. And the shoes of late have been getting larger and larger (Fannie/Freddie, AIG). At some point the shoe would be so large as to crush the system.

This begs the question -- at what point does financial instability/chaos become intolerable? I don't think there's an answer for that but it's a good question.