It's hard for me not to use analogies when talking about the current economic crisis. Since I work in the medical field, my want is to liken the crisis to a patient with multiple problems. Not all are fatal, but many are contributory to the serious situation the patient faces – that of impending death.
When a person's heart stops, it's game over. In medicine we call this a “code”. Sure, there are a handful of things we can try to get the heart going again, but all of these start basically from the premise of having nothing to lose because the patient is technically already dead. We can use various medications, electricity, blood and IV fluids all in an attempt to maintain perfusion, but unless the underlying issue is treated, we just won't succeed. No matter how much time and energy we pour into revival efforts, if we can't get at the core issue (getting the heart to pump effectively), the patient is lost.
The financial system today faces this same situation. It has not yet “coded”, but the heart rate is very slow and not moving enough blood to maintain perfusion. Treatment begins by addressing the most life-threatening symptoms and then assessing as rapidly as possible why they began in the first place. We have already dumped lots of blood and fluids into the patient (cash, guarantees, and TARP funds) – but so far not much good has come of that. There's enough fluid in the body, it's just not getting where it needs to be. Now what? Is the heart beating effectively enough? Is it pumping the blood out to the body systems?
The heart can go into a very disorganized rhythm called ventricular fibrillation. When this happens, the ability to circulate blood is so ineffective that death is very quick indeed. The best thing to do at this point is to use a shock from a defibrillator and allow the heart to reset its electrical conduction system from zero, which may allow it to come back into a normal and effective pattern. This is often done more than once and in conjunction with medications to increase the likelihood of it working. This is the big gun for us. If medications and electricity can't get the heart going after a short period, we call the code (pronounce the patient dead).
Nationalization of the banking system is like using the defibrillator. It will allow a reset to occur in the financial industry, if possible. If it does not work, we can call the code – game over. But until we try it, we will not give the patient perhaps the best chance to reset and begin to function normally. And even if this works and the banks come back, we still need to examine and treat many other contributory factors (co-morbidities we call them) or we will end up back where we are today. Getting the heart working is one thing, figuring out why the patient had the heart attack in the first place is the longer and more complicated part.
But sometimes you just don't get patients to be compliant with treatment until they face death. Sometimes they just have to learn the hard way that they need to be more responsible and take care of themselves – with the assistance of their physicians of course.
Time's getting short to act, and despite what many people believe, seconds never count - but minutes always do.