The piper is piping for a number of our financial institutions. And somebody needs to pay him (or her, I’m not committed to anthropomorphizing our financial crisis as female). This post will discuss that and how it relates to the question of nationalizing the financial industry.
So we’ve got a whole bucket of financial institutions that, to put it bluntly, may be broke. In other words, the stuff they own, their assets, might be worth less that the stuff they owe, their liabilities. These troubled institutions, including Bank of America, CITI and others, will argue that this is not so, that their assets are temporarily undervalued but that in real terms their balance sheets are healthy. In some cases this might be true, in others it might not be. What will happen in the cases where large financial institutions are insolvent?
