Witnessing colossal failures of capitalism?

[sarbox68]

It's an incredibly bad deal for the government. It undermines the value of US treasuries and increases the chance that other nations may refuse to take on US debt.

Agreed. But it's considered the lesser of two evils. And without another currency strong enough to replace the dollar as a global peg, I think it's really unlikely we'll see as much impact as some think. There just isn't much else to fill the void. The Euro zone has it's own problems, and a pure shift to commodities (bring back the gold standard anyone?) is just not going to happen as those assets tend to exist in abundance in the least stable parts of the world. That's what I think is fundamentally different this time than 70s, 80s, etc. The pain will be felt globally, but will also be distributed globally as sh!t is much more intertwined than ever before.

A lot of banks seem to be merging together right now. Bank of America bought up Merrill lynch. Now Morgan Stanley seem to be merging with Wachovia. An interesting theory regarding this is that the banks know they are going to fail and they are trying to get as big as possible so the government will feel compelled to bail them out. It's worth thinking about.

Also an interesting POV... and you may be right for some... altho' I think the govt has proven with Lehman that there's no guarantee, regardless of size. I think the next one we'll see is Washington Mutual... they're a thrift with pretty extensive mortgage exposure BUT, they also have a perfectly viable (and valuable) retail banking operation that makes them a long-term asset and are incredibly undervalued right now on that and pure asset book value alone. I'm betting they get picked up by Wells Fargo for pennies on the $, with minimal disruption to account holders.