[Philly Nomad]

But that’s going to be a cost to the economy.

If the banks lose their shirts, they are going to tighten up the credit regardless. Companies won’t be able to issue bonds to expand, Venture Capitalists won’t be able to fund new startups, Home buyers won’t get mortgages, Small Businessmen won’t be able to get affordable loans.

Who do you think will come in a pick up the slack?
China.

[Clemenza]

Nah, the Chis made the mistake of holding their reserves in dollars, and are getting creamed by the falling dollar. Our depreciated dollar and the inflation in commodity prices has helped out the oil producing states more than anyone else. In other words, it may very likely be petrodollars from the Emirates/Qatar/Saudi that will bail us out.

[riverdawg]

The Fed will most likely keep interest rates low to provide the “liquidity” to prop up financial institutions’ balance sheets. This will help, not hurt, all of the things you mentioned (start-ups, mortgages, business loans, etc.).

[Toddsterpatriot]

But that’s going to be a cost to the economy.

Sure.

If the banks lose their shirts, they are going to tighten up the credit regardless.

As they should.