This crisis is a classic example of the old adgae about bad money driving out good. Until the underlying problem of bad debt - and frankly no one has a clue where it is since it was bundled up into various schemes that were traded between the banks which was fine as long as the house prices didn't crash - is removed then the current problem will remain. So we have the following solutions:
- Even if the banks could start to trade again so that they start to lend to each other won't help. It might make the problem worse.
- Don't even think of writing the debt off. The money supply would dry up in seconds ....
- Print more money ? Galloping inflation here we come ....
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