Yves Smith mentions one idea that I like - in effect, get the banking failures over with quickly. Today we don’t know who is going to fail or not — so we don’t want to lend to anybody.
This “Bailout 2.0″ idea comes from Morris Goldstein at the Peterson Institute. It in essence recommends that the powers that be spend some hard dollars to do price discovery and ascertain how damaged the big players really are, It then sets forth a plan for recapitalization, which includes having companies suspend dividend payments, That is more important than it might seem. Banks pay $400 billion a year in dividends, so suspending or reducing them would help a great deal in shoring up the system.
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