Random Thoughts

Prof. Hamilton has argued that converting bank's preferred stock to common equity is never going to work since interest payments were never a problem for banks anyway. a better option is to restructure the economy i.e. erase equity value, sell the assets, and payoff the debtors.

doing so might be economically prudent, but is not politically feasible considering the stake of sovereign funds in the banks. this is the argument Brad Setser presents , quoting Wang Qishan

“We hope the US side will . . . guarantee the safety of China’s assets and investments in the US”

links : http://blogs.cfr.org/setser/2009/02/25/unintened-irony/
http://www.econbrowser.com/archives/2009/02/the_bernanke_ra.html