The WaPo headline says “U.S. to Invest in Country’s Banks In Effort to Revive Credit Markets.”
We are not experts on how to rescue dysfunctional banking systems. Paul Krugman who just won the Nobel Prize in economics for his work 30 years ago says that the beefing up banKs strategy – first outlined by Prime Minister Brown a month ago (a Euro weenie in Bacon lingo) – is the right strategy. So for now we will go with that and see how it works.
What we can tell you is:
If this credit is used to invest in the wrong things – Wrong Size House in the Wrong Location, Large, Private Cars, Papier-mache Infrastructure and other drivers of settlement pattern dysfunction – the next crash will be worse and the next time Agencies will not have any money left to bail out anyone.
In the short term the goal must be to create several strong, competitive banks in every New Urban Region.
In the longer term? See the four Elementary Rules to save the US of A’s democracy and our market economy in IT IS ELEMENTARY.
EMR
