Allowing free entry into securities dealings and thus allowing creation of markets for bank loans alleviates the “mark to market” problem. Banks say they don’t know what values to place on their bad loans. Markets provide valuation information. On the other side of the bank loans are the borrowers. The personal debts need to be worked out. If the banks won’t do this on their own, then when they sell these loans, the new owners will work them out with the borrowers involved. By having real markets in these loans, the new buyers can bid a price that allows for … Continue reading Nationalization versus the market