Even after all of the capital that has been pumped into proping up banks worldwide, banks still don’t trust each other (and us) enough to free up the liquidity to reanimate the credit market.
Should we be pouring good money after bad in an attempt to save institutions that simply don’t understand what their obligation and business really is?
The Baseline Scenario is a very interesting site that is focused on: What happened to the global economy and what we can do about it.
One of the more interesting discussions is around the idea of creating new banks to quickly restart vital lending to business and to let the “old” banks more or less fend for themselves. This is very different from the idea of creating a big “bad debt” bank so that institutions can easily offload their toxic assets.
The really nice thing about this idea is that these new banks can be easily privatized within a fairly short period once they gain clear momentum. We would then have new institutions that we know don’t suffer from the same greed and largese of the old banking system while establishing a new positive working relationship – new trust relationships.
Check out this site . . . if you are interested in having a chance of knowing what is happening to our global finance system.