Tug-of-War; pity the rope.

I suspect most of us have played tug-of-war at some time in our lives.  Two teams face each other holding opposite ends of a strong rope, each with the intent of pulling the other forward, occasionally into some circumstance deemed undesirable, like a large puddle of mud.  Naturally the focus tends to be on the two teams.  Little thought is given to the rope, but it must feel (as if inanimate objects actually could) like both sides are trying to tear it apart.  The current dilemma regarding our nation’s banking system has some similarities to this children’s game.  On one side are private investors who would be glad to pull toxic assets onto their side of the balance sheet if only the price were set low enough.  On the other side we find the banks pulling for much higher prices in an attempt to mitigate losses and save their balance sheets.  These opposing forces are placing an enormous strain on financial systems everywhere, and resolution seems nowhere in sight.  Unfortunately, if the issue remains at a standoff, the solution might involve confiscating the rope.  In other words, nationalization of key banks may be the only way forward without getting somebody very dirty.