What is and has been happening in the American and global economy wasn’t built over night, or even during one or two administrations, it was the result of over 20 years of the directional changes in international economics.

You could probably take a look at Reagan/Thatcher’s (or Greenspan) policies and begin there from some of their views on global economics that allowed for the formation of “shadow” banking, which included bad lending policies, lack of regulations (yes we know many fiscal conservatives aren’t proponents of regulations, but there needs to be a certain extent of regulations to protect people from themselves as we see now in the bad housing loans),etc.

These policies were more or less carried on by Bush, Clinton and W. because at the time, they were quite successful, but certainly unsustainable. Bush (W) was unfortunate to have presided over a time when Lehman, et al collapsed on his term (imagine if it was delayed for a few more months).

We must remember that although partisans would like to place some of the moonbats and wingut politicians on opposite ends of the political spectrum, in terms of greater over all foreign policies and economics, they are both generally similar.

I would expect the banks are buying treasuries? And a lot of the cash that has come out of other asset classes has gone into bank deposits? Interest rate spreads on commercial loans are increasing, a good thing in my opinion.

I agree with you about the stupidity of continuing mark-to-market rules when (as I understand it) the market is very thinly traded and the only sellers are distressed.

Credit default spreads are out of sight, which basically means you can’t get somebody to buy your lending mistakes, which is as it should be.

So why the continuing panic in bank stocks, including State Street, PNC, and Citi, but also RBS and Bank of Ireland yesterday?

I am looking for a reason to believe that the sun will come up tomorrow for the banks, but right now the blood is running in the street.

As an analyst who follows bank stocks, I can tell you that the banks and financial institutions are not making money because they are not lending. Their reserves are doing just fine and there is more liquidity, but they are cautious and sitting on the cash. Part of the reason is that they are still writing down the value of assets on their books. We should have suspended the mark to market rule, as Newt Gingrich suggested, or at least modified it so that the mark to market would happen, say, quarterly.

Isn’t it amazing how, before the election in a most timely manner, 5% of all the outstanding sub prime loan portfolio has unraveled everything?

Remember it will always be ‘the mans’ fault be that GWB or ‘the system’ or white privilege. The current regime of “The Ones” shall never have to accept responsibility for their actions.

Given my own suspicion that the economy – at least on main street – is already starting to come back around this means at least 2 things if it proves out to be the case.

One, Obama would not have a thing to do with the turnaround.

Two, it means that Bush’s policies were already starting to have an effect prior to the inauguration.

So, I expect the media to do a subtle tap dance to talk up the economy in order for The One to be seen as successfully addressing the financial crises, but do so slowly enough that the *credit* can be taken by their Messiah.

Of course, if the dollar crashes all bets are off either way….

Obama will not “do nothing and let the economy recover on its own.” Instead, he and the Pelosi congress will take strong active measures on the economic, energy, and climate change fronts which will make the economy far worse than at present.

They will continue to successfully blame future downturns on Bush, with the aid of the media.

Unfortunately the Republicans of the last eight years were too inclined to meddle but are capable of learning a lesson. I have known very few democrats in the last forty years who have be able to refrain from meddling. Clinton’s only salvation in that respect was the Gingrich led republican congress. If Obama were wise he would do well to heed Voltaire –
“The art of medicine consists of amusing the patient while nature cures the disease.”

In other words – if left alone the economy will get better on its own and if he spends his time “amusing the patient” (the American people) while that happens he will be lauded as a great man. However I think Obama, Pelosi, and Reed et al are too full of themselves to understand that doing nothing is often the best way of doing something.