Radical yet Rational
http://www.ft.com/cms/s/0/813d18d4-f7aa-11dd-a284-000077b07658.html
Although I'm not a big-fan of "mark to market" system of accounting, this does seem like a good way to 'clean up' the system in way that we normally wouldn't imagine. Yes, I agree this is going to "fatally bleed" companies that have already lost a lot of blood, but atleast this way the books get "cleaned up" for good and they can start afresh under a greater degree of transparency that this country's financial system needs badly.
Since things have gotten out of hand already, doing this might precipitate the issue a bit more but then on the positive side help these institutions regain some level of efficiency in operation that makes sense. If these companies deserve to get any more of taxpayer's money, then must show the committment to "come clean",
posted by Barath Shankar Subramanian at
4:17 PM
2 Comments:
Cleaning up their books comes at a cost. As the article mentions, many of these bansk will stand exposed as insolvent. And that leaves us with only one course of action - nationalization. Else there is no point in keeping on pumping public money into banks. The risk-reward ratio indicates that unless the state takes ownership of the banks (albeit temporarily), this doesn't make sense for the taxpayer.And that would be a huge step. Too huge for Obama to consider.
Thats exactly why I titled it Radical but yet Rational - because I think its the "right" thing to do but unfortunately right might not be the best thing to do for these banks, but an interesting take on things nevertheless.
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