Instant Economic Fix: Invalidate Credit Swaps
Sometimes it takes a lowly blogger far from Washington to point out the only obvious credit fix:
Invalidate All Credit Swaps
When credit swaps are greater than the whole nation's assets, then there is no possible bailout that will work in any way. Duh! So think of this as a government mandated bankruptcy for the whole financial system. In bankruptcy, what debtors are paid what portion is determined, so there is a precedent.
Yet there are still people thinking that the taxpayers can bailout the financial system and pay all of those credit swaps. Really they are thinking that doubling the debt of the US will fix it.
By Mark Pittman and Bob Ivry
Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.
The current financial Republican thinkers are either incredibly stupid or incredibly cowardly!