I'm reading the tea leaves here, so caveat lector.
I followed a link from the Calculated Risk blog this morning, read this and thought:
Uh-oh.
Here is the story:
Group of 20 governments are considering naming as many as 50 banks as systemically important to the global economy and in need of extra capital, two officials from G-20 nations said.
The list, drawn up by Financial Stability Board Chairman Mario Draghi, will be published in time for a G-20 leaders meeting in Cannes, France, on Nov. 3-4, said the officials, who declined to be identified because the discussions are private. Regulators have said the banks named will be forced to take on more capital.
...
Twenty-nine to 40 banks could be designated depending on the potential impact on financial markets, according to one person familiar with the matter. Two officials from G-20 nations said the list could even be expanded to about 50 institutions. The regulators are also contemplating including the institutions in categories according to their ability to absorb losses.
"Need extra capital" sounds to me like a codeword here for "Need to be bailed out." The private sector will not provide enough capital to every one of these giant failed institutions to keep them from going under in the face of stresses like the lending debacle involving Greece.
"Will publish" -- I read this as ... the G-20 finance ministers will provide a list after an agreement has been struck to provide the capital. They wouldn't publish the list before such an agreement could be publicized. It would be like running an advertisement telling the world to pull out all your money and sell all your shares, cuz dees suckas are goin' down!
What remains to be announced, I suppose, is the way that the bailouts will be disguised to prevent discontent among the actual human beings who, entirely coincidentally, live in the countries where these banks are located and in the rest of the developed world.
One thing that we don't mention a lot in our public discourse is:
Not only is there a principle category of persons -- corporations -- under our law, but there is also a secondary category -- humans -- who have limited rights, but ones that might stand in the way of corporations getting their due.
And if the needs of humans are not occasionally taken into consideration by governments, the plans of corporations can be foiled.
I'm guessing that the existing bailout funds in Europe will be restructured in some very clever way to draw funds through the IMF and the central banks that can't be easily explained to the average voter. Central banks will create money ex nihilo and use it to buy toxic assets (again) owned by these 50 institutions. Treasuries will loan money to specially-created government agencies who will be authorized to buy newly created shares in the banks, or make special loans to the banks that can be paid back using free money printed by the central banks and gifted to them through back-door channels.
Hurrah.
"Timothy Geithner" will party on with Jack Paulson and Andrea Merkel at Davos, much champagne will be spilled and there will be a lot of backslapping until three years hence when it's time for the next bailout.
Meanwhile, the unemployment problem continues and the general economic malaise.
There are other options here:
Bail out the banks by bailing out the people. People who have jobs can pay their debts and taxes. People who have jobs can buy goods and services from each other and even giant corporations.
Or better yet, take this list of 50 banks and break them fucking apart.
Then, get your priorities straight. Bail out the people and the banking system will be saved.