Like most Americans, I have money tied up in some form or another in the stock market. And like most Americans, my retirement and kids’ college funds have been hit hard.
But like an increasing segment of America, I believe that we will only turn the corner on this economic crisis when the government places the largest insolvent banks – Bank of America and Citigroup at least – into receivership, sells off the toxic assets at their market prices (near zero), and re-privatizes these institutions as smaller and healthier banks.
It is apparently concern on Wall Street that such course may be undertaken that has driven financial stocks down today. If this reading of today’s drop is conventional wisdom, then the impending nationalization of big banks is causing investors to get out of big bank stocks, which is driving the overall Dow down.
Sometimes we need short term pain for long term gain.