Adding liquidity to insolvent banks: like filling gas tank of a wrecked car
Yves Smith reprinted this Most Excellent quote: “We believe that the stimulus is too backend loaded and unimaginative to affect anything sooner [than late 2009 or early 2010].
“Adding liquidity to the banks is as useful as filling the tank of a car wrapped around a telephone pole. Who are the banks going to lend to?
“And increased spending on health care, with the highest and least efficient per capita cost in the world, is like giving the driver of that car a bottle of vodka to ease their pain.”
Continuing (from original source “Jesse’s Crossroads Cafe”):
The consumer is insolvent, and until the median wage turns around will not be inclined to borrow for consumption again, as they should not. The nation must shake off the legacy of the Greenspan era and the economic cargo cult of the Chicago School.
It could be a long, hot summer.