What do you do with a bankrupt bank?

Several important questions, which generally surface to the top of the common man’s head when reading the headlines surrounding the economy, are answered in the article Bankrupting Leverage: Are We A Zombie Nation?.

First, What is deleveraging? How does the government plan to apply this principle to our banks and all of their rotting assets to rescue them from the flames of the burners of bankruptcy?

Second, There is much talk of the N-word, “Nationalization”. If the government seizes control of a drowning bank, what kind of a life-preserver has it prepared?

Third, We know that nation-wide debt in the private sector is bad, but we also know that money is still being made, what is the relationship between the gross domestic product and the gross national debt?

These are just a few of the key questions that this article provides answers to. Here is an excerpt from the article:

“If 1980 is a base year, and we hypothesize debt levels at that time were affordable and smart, and that we should return to them, then they suggest the excess of debt which households owe today equals $7 trillion (of a total of $14 trillion).”

It will be interesting to see how these issues pan out. Let’s pray that we can consolidate our debts and before this all gets too hairy.