An
admission: Economics is not my strong suit. With that out of the way I
still think I and everyone else too can have an opinion even on things
in which they are not expert. The latest Vesuvian eruption to send out
the messenger of fear into the body politic is today's announcement of
the First Republic Bank's collapse. This bank was rated one of
America's best banks months before. If we measure bank failures by the
1929 Great Depression yardstick it catapults us into a depressive state
of fear and anxiety. Nothing so far has reached the devastating
depressive effect of 1929. Still, it does not mean that when the
economic waves of insecurity strike in the form of bank failures that we
should not worry at all. The failure of First Republic Bank still
wreaks havoc with some of the ships at sea. After all, it was not that
long ago that the 2008 economic collapse concerned me and many others
too. Banks were overextended then, to say the least, in handing out a
plethora of bad mortgages which the buyers could not repay.
Why
is this happening? Why can we never be 100% secure that the banks are
monitored to within an inch of their life so that they will never
overextend themselves again to ensure we will no longer get a surprise
that banks were slovenly over extended and that First Republic Bank's
slipshod bookkeeping could not be at fault because the Federal
government took care of that in 2008 so that this nation never again
would have faulty unbalanced ledger sheets. Think again.
The
great ideological divide is that conservatives are loath to government
intervention of, well, nearly everything especially things financial but
progressives since FDR think in certain very threatening occurrences
the government should and must come to the rescue. I believe there is a
place for government when self monitoring fails.
Coupled with Republican intransigence of raising the debt ceiling that could catapult the US into the thicket of economic ruin the times are worrisome. Jaime Diamond, the CEO of J.P Morgan Trust, bought out First Republic. He said the nation's banking system is solid. Should we take his word for it? As I see it, I think not.
