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To: Erskine Childers
It's neither a liquidity nor a solvency crisis.

That is, the immediate and most pressing problem is not whether some companies are short of cash (liquidity crisis), or have more debts than assets (solvency crisis.)

The immediate crisis is a mutual lack of financial trust between the various large financial players. That trust is the very life blood of the world's greatest economy, of the world's dominant currency, the dollar, the world's biggest economic market and the world's biggest, safest, most liquid investment market ... the United States.

Anyone controlling large amounts of assets is starting to hoard that money, rather than engaging in routine business transactions, for fear the other guy won't be good for it.

Without that trust, we're all a lot poorer.

Questions of what to do with individual companies are secondary.

9 posted on 09/24/2008 8:41:12 PM PDT by ThePythonicCow (By their false faith in Man as God, the left would destroy us. They call this faith change.)
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To: ThePythonicCow
Anyone controlling large amounts of assets is starting to hoard that money, rather than engaging in routine business transactions, for fear the other guy won't be good for it.

The only way to solve that problem long term (for more than maybe five years) is to deflate assets so their claimed values approach their actual worth.

16 posted on 09/24/2008 9:02:32 PM PDT by supercat
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