but how about companies.... AT&T was effectively frozen out of the commercial paper market for 2 days.
http://www.bloomberg.com/apps/news?p...d=apN0dqws1jxU
A farking T and T. that kills companies. Kills them dead.
three-month LIBOR (the rate that banks charge to each other) routinely paid 5 to 10 basis-points (0.05% to 0.1%) over the risk free US treasuries 3 month rate for years until last summer. then last autumn LIBOR spiked at around 100 basis points, and the finance world collectively crapped a brick, banks failed and we thought we were at the gates of doom. after a couple of spikes it dropped down to a fairly stable 60 points or so for a while... until this month. It is now pushing 300 points. this is BANK to BANK. AAA rated coprporates pay more. less than AAA pay more still. BB rated companies ....good luck.
Credit is the Oxygen of the business world. Healthy marathon runners die if they don't have oxygen. Same is true for firms. FIrms die from this. Healthy firms die from this. How many healthy firms can this country lose before it starts to hurt, even on Main Street Lewinsville, TX?
Banks are not normal firms. Banks are special. If AT&T dies there is a ripple effect that spreads through the economy. If Citibank dies (and the rest of the industry isn't healthy enough to pick up the pieces) there is a tital wave instead.
I really don't think people truly get what will happen if our banking industry collapses. We move from being the US to being Argentina. this is bad.
HOWEVER... likely we will manage to limp through it. we will have a big slowdown, bad stocks, high unemployment, etc etc. etc.. but we will limp through it... and the person on the street will bitchmoanandcomplain about the fact that we gave wall street all that money and got nothing out of it. Folks, this is the BEST CASE possibility... we don't even want to contemplate the worst case scenario....