[I]t is a myth that we need banks lending so we can have more debt to get us out of debt—that bit of circularity escapes too many people—but we do need banks all the same. Having the current crop playing mirror-world Price Is Right games with their assets while they wait out the current recession/depression isn’t helpful.
…
[S]hould we ignore Greenspan altogether? Feel free, but don’t come to the wrong conclusion. Ignore him because he presided over the creation of the current financial crisis. Or ignore him because he is late coming to an obvious conclusion. Or ignore him because he has a conflict of interest that people reporting his comments generally don’t disclose. But for once, Alan Greenspan is right. Temporarily nationalizing insolvent banks is a good idea, and we shouldn’t dismiss it just because a discredited and conflicted former Federal Research chair is saying so.
