"Fools seldom differ
Just a few points:
"The government has needed to say--what the government needs to say is nobody's going to lose a dime by having their deposits in these banks."
"For instance he thinks that bank liabilities should simply be guaranteed at this point (at least for the large banks) and that guarantee should carry the personal weight of the President."
In order to end Debt-Deflation, the government has to issue such a guarantee. I believe that they have done that. It's not a question of the guarantees any more, but the cheapest and best way to spend our money. We're going to spend whatever is necessary. In my mind, their actions, if not their words, prove that.
"Moreover he goes on to repeat that the opportunities in banking are simply wonderful now – so long as you can get past the past."
Buffett is a follower of Graham, I believe. I'm not a big investor, but I follow most of Graham's views. There is no doubt that there are good investments in Toxic Assets, Corporate Bonds ( Junk ), Distressed Equities, and that a downturn is generally a good place to buy. But it is awfully hard to do, and you do need to look at each specific case.So, given his investment philosophy, Buffett is saying what I would expect him say, more or less.
"Yeah, and interestingly enough, they don't need to supply the banks, in my view, with lots of capital."
I know that you went to great pains to discuss insolvency, but most people assume that, if you NEED money or a loan, you're insolvent. Otherwise, why in hell is the government giving them money? To the extent that the government provides funds or subsidies, taxpayers will assume that the borrowers are insolvent, otherwise, they shouldn't be getting any money from us.This is especially true if they don't use the money for more loans, even if that's not a good idea. In other words, I don't think that you can get away from selling this aid as a solvency crisis, even though that has the effect of making calls for nationalization stronger.
Don the libertarian Democrat
Only post this if you think it adds anything to the debate.