Foregive me if I am wrong, but wouldnt this bankrupt our lending services just the same?
Our whole problem is Banks cant get their money back from past loans. If they loose too much money, they go under. This plan just forces them to take the loses now under, instead of over time as people default.
Minus the social costs, I dont understand how this fixes the problem. Again the only option is for the GOV to willingly take it in the shorts and have taxpayers foot the bill by overpaying in the ED takeover and then underselling the loan back. Otherwise our banks go under and stop lending for fear of not being repaid as weak banks die in the forced ED takeovers. Companies die due to no lending. Unemployment shoots up. Stocks dive as companies fail. Etc etc etc. It is no different.
We have two choices.
1) taxpayers foot the bill for the banks looses and everyone pays for the bubble, even the responsible who did not partake. Considering the size of this bubble, the cost is far higher than anyone wants to admit.
2) Banks foot the bill, weak ones go under, lending tightens, weak companis go under, and we go into a recession that punishes overly risky lending/borrowing (and some good unlucky ones too)
