I will happily admit that economics isn't exactly my bag. But with other Toms getting into the act, I figure it's open season. Ezra Klein found a pithy characterization of the current state of the world financial system in Politico's Playbook. If this "oft-quoted investment banker" is to be believed, we now have a Schrödinger's Cat economy:
The problem is there are no sellers; that is, the banks won't sell. Because to sell is to book a loss on what you have sold and what remains. And to do that is to die. That's what it means to be insolvent.So. As long as we don't open the box, we're okay. Trying to "fix" the system will invariably involve opening the box and you know what that means for the cat. I guess that's why they call it a paradox. No wonder Geithner punted.
*Not my cat
Photo by Hannibal Poenaru used under CC license