Friday, February 13, 2009
Zombie banks and Doublethink
The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks... And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that. All power corrupts; absolute power corrupts absolutely. -- John Emerich Edward Dalberg-Acton
To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies -- all this is indispensably necessary. -- George Orwell, 1984
Jacques Attali, Wall Street Journal: The global banking system is... on the brink of bankruptcy. So the worst-case scenario is the most likely scenario: a collapse of the banking system followed by world-wide inflation... This panic could be set off by the realization of the insolvency of the system... A number of determined groups, with even limited means, could organize speculative attacks on banks, leading to their collapse... It could even be followed by hyperinflation, provoked by the immensity of the monetary means created since the start of the crisis... a global Weimar.
Willem Buiter, Financial Times: Many (probably most, possibly all but a handful) high-profile, large border-crossing universal banks in the north Atlantic region are dead banks walking -- zombie banks kept from formal insolvency only through past, present and anticipated injections of public money. They have indeterminate but possibly large remaining stocks of toxic -- hard or impossible to value -- assets on their balance sheets which they cannot or will not come clean on... The public financial support offered... has been a complete failure.
Image source here.