First, the overview:
...it is a certainty that a credit freeze would be a disaster in the short and medium term, to a degree that many people simply do not appreciate at all. I can't predict exactly what form the disaster will take, nor precisely how bad it will be, any more than I can predict exactly how the train cars will end up in a major train wreck. But I know it is very bad and should be stopped. It is every bit as important as any critical national security or natural disaster concern.
...It's really bad, and people ought to accept that it is really bad, and that it isn't just about those guys over there but is going to be bad for you and your neighbors. The populist nonsense about 'each house being robbed of thousands of dollars to bail out Wall Street' is just poppycock: this is about saving your own bacon as much as anyone else's, and it isn't going to cost you thousands to do it.
I completely understand Main Street cynicism on the point. A perfectly justified cynicism combined with a genuine clear and present danger is a toxic combination.
...The problem with the national debt is not that it exists, but what it has been spent on. To the extent that the national debt is at work on productive endeavors which expand the tax base and increase the flourishing of the country - a sadly small extent, I suspect - it is a good thing. Carrying debt is intrinsically neutral; it can be extrinsically good, or extrinsically bad, depending on circumstances. Averting a credit lockup by buying up valuable but illiquid securities is among the best reasons ever proposed for issuing government debt, comparable perhaps to issuing government bonds to finance a necessary defensive war.
And, of course, the capstone (as Sykes mentioned this morning...):
...the longer it takes to get to intervention the more expensive and socialistic it will be
That post (a lot longer than the excerpts here, and all just as good and reasonable) is followed by another one which 'splains the mortgage problem so even a
Suppose we have ten thousands banks, and each of those banks has in its possession a thousand bags of metal. Somewhere around eighty percent of the bags are known to contain gold. Somewhere around twenty percent contain lead. These percentages are not hard and fast, but they are roughly good numbers.
...The distribution of lead and gold amongst the banks is entirely unknown, but it is definitely not uniform. It is not even entirely clear how many bags a given bank has.
...On the other hand, if I have a large enough amount of capital to buy up all of the bags from all of the banks, it is perfectly reasonable for me to expect that 70% to 90% of them will contain gold. If I can buy bags on the open market for $20 right now, that represents a very good investment opportunity; only if I can buy substantially all of them. If I can buy them all, it is even well worth it for me to take out a loan to buy them all, because I only have to pay a couple of percent on the loan whereas my returns on the portfolio will most likely be quite a lot higher
Reading them both, in their entirety, should be quite helpful.