Americas Banks: Are They Really Insolvent?
Several well-respected economists have gone on record over the last few weeks and discussed the likelihood that our country’s financial institutions are all insolvent. Two particularly heavy hitters – Paul Krugman and Nouriel Roubini – have gone as far as to advocate nationalizations on a wide scale. It seems that just about everyone and their moms have jumped on this idea as the perfect way to “punish irresponsible shareholders” and “hold management teams accountable.” Interestingly enough, very few of these people ever acknowledge two very important questions that must be answered before we, as a nation, embark on a campaign to nationalize our financial institutions and radically alter the course of American economic policy. Is our financial system truly insolvent? How will nationalizing solve our financial woes? After all, are we looking for a scapegoat for the current recession or are we trying to get our economy back on solid footing? What exactly is insolvency? Insolvency is when
