They are dead yet they still walk among us. The wander the country surrounded by the stench of their corruption and their rotting flesh. And they are hungry. They must feed and they can only eat They have been called Dead Banks Walking. A more descriptive term came from the Japanese depression of the 1990's - Zombie Banks.
Zombie banks are so burdened by debt that in any rational economy they would have gone bankrupt, died, and been buried. But these banks are "too big to fail" so they are propped up, filled with whatever reanimation liquidity the Federal Reserve can devise, and made to walk the land. But all that effort doesn't make them any less dead. We are talking about big banks here. Wells Fargo, Bank of America, CitiBank, and the Royal Bank of Scotland are all rotting corpses yet still walk.
Treasury Secretary Tim Geithner has decided to follow the same much loathed policies (such as they were policies and not frantic panic) of his predecessor, Hank Paulson. In a sick remake of Weekend at Bernie's, Geithner insists on propping up these banks and pretending they are still functioning enterprises. The bankers, as is their fashion, continue eating away at Geithner's brain with their multi-million dollar bonuses.
President Obama rejects nationalization of the banks, saying it wouldn't make sense. On the other hand, Nouriel Roubini in Forbes and Paul Krugman in the New York Times point out that only nationalizing the gigantic failed banks makes any kind of sense at all. I realize that the President is afraid that Rush Limbaugh will call him a socialist and is rejecting nationalization mostly because of how Republicans would react. But, the nation needs aggressive action. The Republican path of weak socialism is the route to certain failure.
Read also Arianna Huffington on this issue.
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