There's a key element that I don't see covered there. While classical market theory would justify Miron's contention that "If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value," what the banker types are reporting is that due to the crazy confarbled new securitized mortgages bundled with credit card debt, other loans and more into derivatives, no one knows where the bad debt "paper" is. That's the 800 pound gorilla here. It's what's keeping banks from lending to one another. And it's not something that the traditional model is used to dealing with. I keep hearing it referred to as unprecedented.

Actually, one more part of the current situation may also be outside the regular components/assumptions of the view that Miron is taking. (I could be wrong, but he doesn't mention it.) It's the unusually high leverage that so many institutions find themselves under.

Robert Samuelson, economic and business columnist for the Washington Post and Newsweek, explained the following in a radio interview with Dennis Prager.

"In a very broad sense, [the current financial crisis] happened because lending standards broke down, we got all these bad mortgage securities. But by themselves, those losses could have been contained. The problem is that those losses -- now let me just give you the order of magnitude -- the subprime mortgage securities may be $1.3 Trillion worth a couple years ago, uh, that's a lot of money. But all the stocks and bonds issued in the United States are worth about $50 Trillion. So the losses on this 1.3 Trillion, which may be 25-30%, are trivial compared to the total value of the U.S. financial system.

"So why did this create a larger crisis? Well, I would say two reasons: ONE is that many of our financial institutions, we have discovered, were very highly leveraged [ratios many times higher than traditional practices, some reported at 30 and 40-to-1], that is to say, they bought -- they made investements by borrowing lots of money -- so that small losses basically could wipe out their capital. That was one reason. And nobody really knew where all these mortgages were, so people began to recoil from dealing with each other."

Like I said, I don't know if that would be a hindrance or simply a delay to reaching the solutions that Miron anticipates as preferable. I just thought it was odd that he didn't mention it.