Monday, September 29, 2008

A comment on Carpe Diem

Over at Carpe Diem, in "New Banking Data", Anonymous asked:

How can interbank lending be frozen while other types of lending are ok?

Here's my opinion:

It's a sign of the CDS meltdown. The banks trust their customers to repay their debts more than they trust each other to stay solvent.

I think this credit crisis will spread some, especially if more banks closed. However, we don't need to patch over that debt; we need to burn it.

UPDATE: A Fox News talking head said "we're too much in debt. Let's give them more." Yeah, right....

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