Spring Break
Birth of zombie banks leads to a divided path for economy
Sanjai Tripathi
Issue date: 3/4/09 Section: Forum
Imagine you walk into a clean and pleasantly lit room, with a massage table in the middle. You are only wearing a towel.
In walks a buxom masseuse who asks, "I hear you are stressed out."
"Not too bad, but I could use just a little infusion, if you know what I mean."
She purrs, "I know exactly what you mean. My name is Fed. I'm here for you, to make everything all right."
"That sounds great," you say with relief, certain this story will have a happy ending. "I feel imbalanced, and I've got some stress in me, but I'm sure you can work it out."
"I'm confident I can," she says. "Now just lie down and let me fix everything." So you get comfortable, face down on the table.
The massage begins, and you feel warm as she starts the rubdown. It's really good … at first.
"Oh, you sure do have a lot of stress," she says. Suddenly, you get a bad feeling. How well do you know this woman?
"My dear, I'm afraid you are just too stressed out," she declares ominously. "I can't fix this the easy way. I'll have to use the Swedish technique."
"Swedish?"
Then she pulls a knife out of somewhere and stabs you in the back. Now you are dead.
The lovely lady who you thought was going to make your day then cuts your body into manageable pieces, and proceeds to sell them on the streets of Manhattan to the highest bidder.
That isn't just my own morbid daydream; it's also that of executives at the nation's largest banks.
This economic crisis, if you recall, began when a major collapse in the housing sector took out the financial sector.
Our credit economy relies on the financial sector to keep going. Consumers borrow to buy cars and houses and often to spend on everyday purchases. Businesses borrow to maintain inventories, to expand or just to pay old debt when it comes due so they can stay in business.
The problem is that the banks took much of the huge losses in asset values on the chin, and this creates a special problem for them. Banks can't operate if their losses are too heavy.
In walks a buxom masseuse who asks, "I hear you are stressed out."
"Not too bad, but I could use just a little infusion, if you know what I mean."
She purrs, "I know exactly what you mean. My name is Fed. I'm here for you, to make everything all right."
"That sounds great," you say with relief, certain this story will have a happy ending. "I feel imbalanced, and I've got some stress in me, but I'm sure you can work it out."
"I'm confident I can," she says. "Now just lie down and let me fix everything." So you get comfortable, face down on the table.
The massage begins, and you feel warm as she starts the rubdown. It's really good … at first.
"Oh, you sure do have a lot of stress," she says. Suddenly, you get a bad feeling. How well do you know this woman?
"My dear, I'm afraid you are just too stressed out," she declares ominously. "I can't fix this the easy way. I'll have to use the Swedish technique."
"Swedish?"
Then she pulls a knife out of somewhere and stabs you in the back. Now you are dead.
The lovely lady who you thought was going to make your day then cuts your body into manageable pieces, and proceeds to sell them on the streets of Manhattan to the highest bidder.
That isn't just my own morbid daydream; it's also that of executives at the nation's largest banks.
This economic crisis, if you recall, began when a major collapse in the housing sector took out the financial sector.
Our credit economy relies on the financial sector to keep going. Consumers borrow to buy cars and houses and often to spend on everyday purchases. Businesses borrow to maintain inventories, to expand or just to pay old debt when it comes due so they can stay in business.
The problem is that the banks took much of the huge losses in asset values on the chin, and this creates a special problem for them. Banks can't operate if their losses are too heavy.
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Acai
Daniel
posted 3/30/09 @ 11:51 AM PST
Sanjai,
Thank you for such a detailed, in-depth, well-written article!
Yes, the economic recovery is a huge unknown as far as "if" and "when" it will happen. (Continued…)
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