Megan McArdle: Depositors ought to get their contractual (FDIC) insurance

"... and we simply sell the weak banks to the strong.

Sounds good on paper. Except that we can't.

Why? Because even the strong banks are going through a ton of stress right now. Even if they could establish a reliable and fair price for these assets at arm's length (and nobody can put a reasonable valuation on them at this point), they simply don't have a lot of capital available with which to purchase them.

Eventually, though, that will work itself out, and in the long run you don't need government intervention.

But "in the long run" we are all dead. "In the long run" is a huge, huge problem.

Here's why:"
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