The absence of new crises

[Anonymous]

It's a strange thing about the bank bailout. The absence of weekly panic-inducing crises is taken by the public as a sign that the fears were unfounded. We so easily shift from chaos to second-guessing our government for what it did to prevent a collapse of the banking system. The only talk these days is how the banks got a handout. There is no talk about how lucky we were to be in a functioning economy instead of a depression.

But if you read the news on Saturday mornings, you will fairly regularly see something like the following:

http://online.wsj.com/article/SB10001424052748703499604575512254063682236.html?mod=WSJ_hpp_LEFTTopStories

Now the issue here is that three wholesale credit unions were put into conservatorship. Wholesale credit unions invest the money that you and I put into credit unions. And, surprise surprise, some of them have a lot of bad mortgage debt on their books. I don't have specific numbers, but there are about 7500 credit unions served by about 2 dozen wholesale credit unions. That means that an estimated 1,000 separate credit unions just avoided a major crisis due to government action.

Three years ago, an event like this would have been panic-inducing. This particular trio of seizures are about the size of the Bear Stearns bailout and fire sale. When Bear Stearns was shoved into JP Morgan, it was the subject of front-page news, Congressional inquiry, the government gave an emergency $30 billion non-recourse loan to JP Morgan to make it happen. Now, it is a non-event, even though the magnitude of the problem is about the same. We barely notice the wire articles of these, or the larger number of bank seizures, that happen with some frequency.

I suppose that the public as a whole is never going to appreciate the trains that don't come off the tracks. But it's a shame, because there are people, both during the Bush years and now, who are doing a pretty good job of keeping the financial system afloat. 10% unemployment may not feel good, but it's a lot better than 25%. That's where we likely would have ended up decisive action.

[Anonymous]

It's hard to appreciate that the train didn't come off the tracks when some people wonder, especially after reading about another massive bailout, if this isn't a house of cards that might one day come crashing down. I think plenty of folk understand how close the system come to collapse.

[Anonymous]

It looks like we are going to make a profit on AIG. We are converting our stock to common in order to sell over 2 yrs. We break even if we average $29/share. The current stock price is $38/share. If we could unload it at today's price (not realistic, but hey it's the current market value), we would make a 30% profit, or 56 billion.

Then there is this article about bank failures. They barely seem to make the news.

Also, in crises avoided news,