From my Deep Dive at FP
Before anything else, the banks must be saved, most likely through an open-ended lending facility like the Federal Reserve’s Term Auction Facility (TAF). They must come before taxpayers, before pensioners, before the reforms that might transform southern Europe into a dynamic player in the global economy.
Not because it is fair or just or right. It is none of these things.
It must happen because we have constructed a global economy that has massive international banks at its heart. Money, banking, and credit lubricate the billions of transactions that happen around the world every day. If the global financial system collapses, so will trade.
Though, I lied. There will be lots of crying.
The series also contains pieces from some lesser known – but still quite good – economists like Barry Eichengreen and Larry Summers.
The whole thing is self-recommending – as in, I am recommending myself. And, I am an excellent judge of character, if I do say so myself.

6 comments
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Tuesday ~ December 20th, 2011 at 1:10 pm
from Italy
Do you mean the FED should buy European banks? That would be a nice gift from Santa…
Tuesday ~ December 20th, 2011 at 1:43 pm
Karl Smith
Ha no, that the ECB needs an open ended facility like TAF
Tuesday ~ December 20th, 2011 at 4:03 pm
Word to your mother
Personally, I’m willing to endure the additional tears that it would take to structurally change the economic system based on big banks.
Tuesday ~ December 20th, 2011 at 4:57 pm
Tel
“It must happen because we have constructed a global economy that has massive international banks at its heart.”
Letting the banks fail might fix this quite nicely. The economy is adaptive, it doesn’t need a nanny.
The banks on the other hand…
Wednesday ~ December 21st, 2011 at 4:19 am
FT Alphaville » Further reading
[...] How to save [...]
Wednesday ~ December 21st, 2011 at 12:35 pm
Matt
Save them or let them fail. Either way, get on with it. These half assed attempts thus far will just cost more in the long run and create unnecessary hand wringing by those who aren’t the masters of the universe.
Reminds me of a song by Leonard Cohen
“Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows “