Re: [A-List] Re: [TNF] Fw: Don't look too good for JPM... from gold

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

This is not an opinion.  It is a fact.  The Bankruptcy Code in the US
does not cover Banks which is regulated by the Fed.  Beanks cannot file
for bankruptcy to address insolvency problems.  If you worked at the
Fed, you should know that.  Banks do fail, but they do not file
bankruptcy in the US.

Walter Wriston was also correct. Countries do not go bankrupt.  He was
wrong only in the expectation that debtor nations must repay their
loans.  That became the IMF's job, which acts as a forclosure police for
the private banks of the lending nations, by holding debtor nations to
auterilty programs as the price for new loans to bail out the private banks.

Countries do not go bankrupt, but they can default on their loans and
many do, or at least should do.  The penalty for defaulting is the
inability to get new loans which under finance globalization can be very
painful. Such pain tend to express themselves through a collapse of the
foreign exchange value of the debtor government's currency which further
exacerbates the pains.

The inability to borrow may well be the god-sent cure for most debtor
economies, much like the inability of drag adicts to get new fixes, but
to do effective withdrawal debtors need to do foure things: 1) replace
export trade with domestic development, 2) adopt a monetary policy based
on the State Theory of Money and impose currency control, 3)adopt a full
employment and rising wage regime in the economy through state credits,
and 4) substitute central banking with national banking to support the
health of the economy rather than support the vaule of money.

Henry C.K. Liu


Patrick Bond wrote:
> ----- Original Message -----
> From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
>
> > True, the fall of
> > the dollar is giving JPM/Chase headaches, but banks in the US do not go
> > bankrupt
>
>
> Hmmm... sounds like Walter Wriston redux, Henry! When I worked at the Fed, I
> thought so too... then Continental Illinois came along and suddenly both
> bankruptcy and nationalization were possible...