Fed in AIG rescue - $85B loan

[ajmccarrell]

Originally Posted by strandinthewind

Your argument is flawed because if we let the banks fail, which is what you suggested when you said "but as far as the bank itself goes, let it crash" - any new insitutions will be hard pressed to lend to anyone without sterling credit and cash in the bank. I suggest those people will be few and far between. Moreover, if a significant number of other banks are allowed to fail, the baks you listed will likely fail as well.

You are looking at it ceteris paribus. If the banks fail, the prices will fall to the point where regular joes can buy a house again. Basic supply and demand here. I'm not saying that some eggs won't be broken.