The meltdown in the financial markets can only be described as irrational. There has a loss of confidence in both the banking sector and the government at a time when the only solution requires a collective effort to balance the negativity enveloping us all.
The government has made a lot of wrong moves. The U.S. has spent or committed somewhere around $2 trillion to bailouts and yet, it is hard to see what progress they have achieved… thus their lack of credibility.
What we need is some demonstration of what the U.S. government can do. Perhaps it is time to separate the good firms from the bad and show the public that the U.S. government has the ability to protect and isolate the good banks from this financial crisis.
By first restoring normal lending and business among these good banks… the government will establish a foothold which they can use to target more and more problematic institutions until all are gradually brought into the fold.
If the government can’t even rescue the “good” banks which are fundamentally sound… throwing money to rescue those bad firms will never result in anything positive.
Thinking out Loud 