More Stupid Bush Domestic Policy

More Stupid Bush Domestic Policy
Dale Felber of BusinessBay sends this link to a story I caught over the weekend, then promptly forgot to do anything with. Strangely enough, there was no drinking involved.

Here’s the email:

Global Strategy is reporting that a trillion dollars will be pulled out of US and European banks by the Arab countries:

I don’t blame them for leaving. The US government can now freeze anyone’s assests without any thought of due process and they’re forcing this policy onto offshore banks as well. See

A trillion dollars isn’t crippling to a country with a GDP almost ten times that, and capitalization and liquidity that dwarf the GDP. But it’s still a damn good chunk of liquidity just gone. And don’t forget the effect that loss os liquidity has on lending. Banks tend to get shy about putting more money out there when they’ve just lost a (technical term coming up) shitload of deposits.

So the ripple effects could be enough to smother this young economic expansion in its crib. I don’t have enough hard numbers here to do the math, so I’ll let someone go bug Megan McArdle about the figures.

This may sound oxymoronic, but it isn’t: One of the reasons so many people leave their money in US banks is because they know they can get it back out. Their deposits are safe, and their liquidity is truly liquid. If we start treating foreign depositors the way Third World nations do, then they’ll start treating us like a Third World economy. Argentina can happen here.

Dale wrote his own punchline, so I saved it for last:

A trillion dollars gone from our banking system will have a negative effect on our economy.

An almost British sense of understatement there, Dale!