Nationalization: 'Tis but Thy Name That Is My Enemy

• Report this Comment On March 04, 2009, at 5:10 PM, whereaminow wrote:

  LOL,

  Paul Krugman to James Baker to Alan Greenspan is a broad political consensus? How so? Because the government tells that they are so distinct in their policies?

  HA!

  They are Keynesians. Yes, even Greenspan, who split with the Gold Standard, Classical Economist community long before he became chairman of the Federal Reserve.

  Oh wait, are you going to perpetuate the myth that Greenspan was a de-regulator and free marketeer? Hogwash!

  Are you going to perpetuate the myth that a system built on paper money, central planning, regulatory agencies that could fill your alphabet soup, welfare state, inflationary wealth confiscation through central banking, price controls on hundreds of commodities, import and export quotas, tariffs, government mandated cartels and monopolies in banking, investment banking, energy, housing, money creation, agriculture, education, communication, security, etc etc....

  is free market capitalism?

  Are you?

  David in Qatar

• Report this Comment On March 04, 2009, at 5:33 PM, cydcyd wrote:

  The government should take all the bad banks & clump them together...Then figure out where they are going.

  Stop the branch banking & go back to many banks

  If we have many banks...They will compete against each other & probably do better.

  Laura

• Report this Comment On March 04, 2009, at 5:40 PM, chumptoo wrote:

  I fail to understand the controversy on this. The FDIC takes over on the average to two banks a week and sets them back up to be running banks. They have the process down cold.

  What it takes is the guts to stare down the current politically powerful owners of these big banks. It is amazing to me that this big failing giants still have the same board members. Weren't they the ones who are ultimately accountable for their failed business policies? Shouldn't they be the ones to take their incompetency elsewhere?

• Report this Comment On March 04, 2009, at 7:20 PM, xetn wrote:

  It is government regulation that has produced a mindset in banking that "no major bank be allowed to fail". Thus we have the Fed, created in 1913 by several large banker and supported by the federal government, with no oversight, no audits on what they do, with the ability to create dollars out of thin air. Next we have FDIC which was created to prevent runs on banks during the "great depression". So, if you are a banker, and wish to maximize profits, you can feel free to try any kind of activities knowing that the Fed, the congress and the FDIC are standing behind you. Before the Fed, FDIC and fractional banking (low cash reserves to loans) bankers were much more cautious. They tended to make loans to people and companies that could demonstrate the ability to repay.

  Let them go bankrupt and perhaps there will be less stupidity in bank management. But with government involved, it will be perpetuated.

• Report this Comment On March 04, 2009, at 8:08 PM, crca99 wrote:

  I'm an amateur. I can be fooled and all too easily it seems from looking at my bank stocks. I fail to understand how a country like the US with "experts" everywhere could not foresee and avert this disaster. From where I sit this seems like fraud on a massive scale, and I'm truly angry that I will lose so much as a stockholder and then pay again as a taxpayer. I favor legislation that requires a lender and customer in 1:1 relationship. It seems the 14 or so middlemen that creeped into the previous system were all scamming for nickels thinking no one would notice.

• Report this Comment On March 04, 2009, at 10:11 PM, brwn8484 wrote:

  Crca99

  You should be angry... Angry as He%%. Because this whole fiasco is due to greed.

  Greed of leaders at AIG who failed to maintain safe reserves on junk CDO's. They knew better.

  Greed of leaders at ratings agencies. They criminally rated subprime debt as prime and they knew better.

  Greed of politicians who set up fannie & freddie to loan non-credit worthy borrowers millions in mortgage loans. They knew better.

  Now, we have all the politicians to thank. Whether it is Repubs or Dems, they are all trying to use this crisis to power grab and use the little guy to expand their power base and steal more money from us. If you wonder why the rich always get richer and poor get poorer, its because they set the rules. Ask Geithner why he did not pay his taxes? Because he knows he can get away with it! If you are poor and you steal from the govt, you go to jail. If you are rich and you steal, you just get your rich or politically connected friends to buy your way out of any trouble.

  Same goes for banks or businesses. If you are poor and your business fails, you fail. But if you are rich or politically connected, you get your rich buddies to bail you out.

  Our politicians may tell us that they have our interests at heart, but ask yourself an honest question.... Why do politicians continue to become richer and richer, while the vast majority of Americans are continuing to slide further into poverty.

  Even if you approve of the current group of Bozos in washington they dont really have a clue how to fix this problem, because they are partly to blame. And if you support the Bozos, you deserve the financial crisis and the coming depression.

  Wake up America and call your rep's and let them know we wont put up with this anymore.

• Report this Comment On March 04, 2009, at 10:13 PM, brwn8484 wrote:

  Crca99

  You should be angry... Angry as He%%. Because this whole fiasco is due to greed.

  Greed of leaders at AIG who failed to maintain safe reserves on junk CDO's. They knew better.

  Greed of leaders at ratings agencies. They criminally rated subprime debt as prime and they knew better.

  Greed of politicians who set up fannie & freddie to loan non-credit worthy borrowers millions in mortgage loans. They knew better.

  Now, we have all the politicians to thank. Whether it is Repubs or Dems, they are all trying to use this crisis to power grab and use the little guy to expand their power base and steal more money from us. If you wonder why the rich always get richer and poor get poorer, its because they set the rules. Ask Geithner why he did not pay his taxes? Because he knows he can get away with it! If you are poor and you steal from the govt, you go to jail. If you are rich and you steal, you just get your rich or politically connected friends to buy your way out of any trouble.

  Same goes for banks or businesses. If you are poor and your business fails, you fail. But if you are rich or politically connected, you get your rich buddies to bail you out.

  Our politicians may tell us that they have our interests at heart, but ask yourself an honest question.... Why do politicians continue to become richer and richer, while the vast majority of Americans are continuing to slide further into poverty.

  Even if you approve of the current group of Bozos in washington they dont really have a clue how to fix this problem, because they are partly to blame. And if you support the Bozos, you deserve the financial crisis and the coming depression.

  Wake up America and call your rep's and let them know we wont put up with this anymore.

• Report this Comment On March 05, 2009, at 12:48 AM, TMFBigFrog wrote:

  Toby,

  While I appreciate you referencing my article, I strongly disagree with the assertion that "nationalizaion" and "bankruptcy" are the same thing.

  There are critical differences when it comes to the concepts of property rights, the rule of law, and absolute priority that underpin a functioning capital market.

  Taking the political out for a minute, a big problem with nationalization is that it short circuits the process that guarantees the due process rights and value discovery that are critical in a market-friendly bankruptcy process.

  Putting the political back in, and an even bigger problem becomes that there is a large chance in a nationalization that connectedness and "I scratched your back, now you scratch mine" determines the disbursement.

  Frankly, I'd rather the long established, publicly visible, and largely fair to the market suppliers of capital bankruptcy process be allowed to function. If, as in your assertion they "more or less amount to the same thing", why reinvent the wheel? Why design a new process from scratch or "reapply" a different model when there is already an established and fair process for handling things?

  Recent history and current events suggest that fly-by-the-seat-of-your-pants financial "rescue" attempts can create significant harm. Why risk causing more systemic damage when a successful process already exists for handling the business of a failed firm?

• Report this Comment On March 05, 2009, at 7:55 AM, ifyouaskme wrote:

  The message from the White House has been very clear that the take over of banks to get them back on their feet would be short term.

  It needs to be done, it will be done, as it has been done before. Amen

  And contrary to all the doomsayers, naysayers, and fear monger--it worked.

  What I think should be sounding alarm bells is that in the realization that some entities got to be big to fail, the financial industry allowed even bigger entities to be formed by gobbling up the ones that were too big to fail. How is that make any long term sense?

  Lastly, where were all these insightful financial gurus when derivatives, credit default swaps, and sub-prime mortgages were being cultivated like the latest crop of snake oil? Where was their wisdom and prudent fiduciary mindsets then?

  Look close enough at those having a temper tantrum about proper regulation and transparency and you will find those who were implicitly or explicitly part of the derivative snake oil industry.

  The Commodity Futures Modernization Act needs to be drastically overhauled if not repealed. In an age where a handful of people own the majority of the media (TV, Radio, Newspapers, Magazines) it is too easy to cause a panic and thus a run or the perception of a run on anything. Therefore bets placed by third parties--having no real investment or legitimate concern in the profitability or viability of the concern being wagered on--should be illegal.

  We saw it with Lehman brothers, and now those trying to bring down BOA are circling it like sharks. It isn't that BOA is in any more trouble than others. In some ways with mark to market accounting much of this fiscal fiasco is all about smoke and mirrors, or simply not being able to place a value on a long term investment like real estate which will increase in value over time in excess of what is currently owed.

  But none of that matters now that the sharks, those that own and control the commentary in the media. If they want BOA to fail, it will fail. It is a prime reason why I think short term government take overs of such institutions must be done. Those advocating bankruptcy are the save ones advocating derivatives, credit default swaps, and sub-prime mortgages.

  Essentially those who bilked the financial industry are now buying it up at fire side sale prices, and they want the sale to keep on going. The government should step in and block this activity no different than blocking monopolistic business practices.

  I agree we should have a variety of banks, mammoth banks are not good for consumers, not good for America, and in the end not good for responsible capitalism.

• Report this Comment On March 05, 2009, at 10:48 AM, einniv1234 wrote:

  Unfortunately there is a very political aspect to the word. I don't think it is an accident that an improper term like nationalization was chosen. The opponents of the current administration have shown themselves to be less interested in fixing the country and more interested in scoring political points. They are banking on (no pun intended) general ignorance on behalf of the public to be able to use the word nationalization to paint the current administration as socialists. The sad part is that nationalization actually IS the market solution! It is this propping up of private ownership that violates the capitalist spirit. It isn't socialism but rather more akin to fascism (in the economic sphere... I'm not suggesting anyone will be firing up ovens any time soon).

• Report this Comment On March 07, 2009, at 9:46 AM, MedPeddler wrote:

  Nationalization could be an appropriate word. If we could all trust that government capital infusions would indeed be temporary then more of us could get behind this. But Obama's philosophical leanings are toward socialism. His admin is full of Clintonian socialists. The fear that at the end of four or eight years multiple sectors of the economy will be under government control is not an irrational one.

  Folks like Krugman are also ignoring the fact that someone's got to pay the trillions in new debt that are being floated. I know, I know, that's all supposed to be covered when the cleaned up entitites are spun off back to the market. But I have to ask again, will they actually be? I think our children's children will be paying for all this; if not in higher taxes, in rampant inflation.

  I hear all the arguments about Bush's shadow financing of the war on terror and bills to be paid down the road. Legitimate arguments they are, but that's in the past. We have to focus on what's in front of us. What's in front of us is a government that has consistently proven its ineptitude at running anything now wanting to run the banking, automotive, and healthcare industries.

  Whatever label you want to hang on the behavior is irrelevant. The behavior is the same, and so is the result - failure. This isn't some ivory tower debate between pipe-smoking, elbow patch jacketed philosophers. The failures of socialism are well-documented. Even if you put all that aside, there still remains the debt. "The rich rule over the poor, and the borrower is slave to the lender." - Proverbs 22:7 Who will be our master when it's all said and done?

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