Because of the ‘zombie’ banks America is becoming a ‘zombie’ nation a la Japan of the ‘lost decade.’
As the Obama Administration continues the ill conceived, bank bailout policies of the George W. Bush Administration, the ‘zombie’ banks continue to hold hostage Main Street American businesses and consumers.
To examine how the ‘zombie’ banks are turning America into a ‘zombie’ nation, please follow me over the jump.
In examining how the ‘zombie’ banks are creating a ‘zombie’ America, we should begin with John Maynard Keynes discussion of investments and long-term expectations.
In the General Theory of Employment, Interest, and Money, Keynes states:
"Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die; - though fears of loss may have a basis no more reasonable than hopes of profit had before." John Maynard Keynes
"It is safe to say that enterprise [investments for productive not speculative reasons] which depends on hopes stretching into the future benefits the community as a whole. But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits, so that the thought of ultimate loss which often overtakes pioneers, ......, is put aside as a healthy man puts aside the expectation of death." John Maynard Keynes
From Keynes’ comments above (plus his comments on stock market speculation – not cited here), the animal spirits associated with speculative stock market trading is not what Keynes has in mind.
The Keynesian animal spirits seem to be those spirits imbued in Main Street entrepreneurs who start new businesses or renovate existing companies and the investors (long-term investors – not speculative day-traders) who support and nurture these risk-takers.
The ‘zombie’ banks, on which our national government is spending billions, no trillions of taxpayer dollars to continue their ‘zombie’ operations and who nominally creating new loans, are by nature of their impaired balance sheets constraining the development and funding of Main Street entrepreneurs – the job creators and innovators of our society.
Comments by George Soros, based on reporting by the Guardian, reinforce the notion of ‘zombie’ banks impeding growth of the productive/real economy.
"What we have created now [with the present bank bailout plan] is a situation where the banks will be able to earn their way out of a hole but by doing that, they are going to weigh on the economy," Soros said. "Instead of stimulating the economy, they will draw the lifeblood, so to speak, of profits away from the real economy in order to keep themselves alive." George Soros
It seems that a new, financial system recovery plan is needed– a plan that does not depend on the ‘zombie’ banks, but that will renew the animal spirits of the Main Street entrepreneurs and revive our nation's economy.