What is Nationalization? It means to put under government ownership and/or control a private sector institution.
Like a grassroots tsunami wave, the blogs are now a buzz with the concept of nationalization of the banks. But we pointed out, months ago, by nationalization, Sweden had the best result and least pain during their financial crisis.
Tony has made a list of some of the nationalize now blog posts sprouting up like mushroom clouds in a nuclear implosion.
Indeed on EP we have multiple posts on nationalizing the banks and for reference we have A Little History of Financial Crises. This post is a must read for it gives a eight century history of various financial crises, solutions, what worked and what did not.
Now midtowng reports that Britian is on the verge of bankruptcy as they put their toe into the nationalization water all the while denying they are considering it.
Below is a CNBC interview with Nouriel Dr. Doom Roubini. If his estimates are accurate, the United States might just well be throwing good money after bad and we must consider following the path of Sweden. Should we bypass this money shower now and start pressuring our government to nationalize now instead?
Comments
The problem isn't just Nationalization
It's what the heck you do with it *after* you nationalize. Nationalization is just a change in ownership.
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Maximum jobs, not maximum profits.
true, devil always in details
That's why I pointed to what Sweden did and they basically said "tough luck" to all of those investors, executives, shareholders. Anyone who took on risk or was also responsible for the original debacle. They made them all lose their money whereas we seem hell bent on making sure the people who created this mess not only keep their money, but get more money and power.
We especially have a problem in that public service, government is a revolving door with the private sector, esp. large multinational corporations as lobbyists.
Right now it seems the U.S. taxpayer, they are simply nationalizing the risk and privatizing the profits.
Seems to me that somthing very liket his worked during.....
....the 'S&L Crisis and Lordy the causes were pretty much the same. Yeah, securitization.... Ask John McCain he probably remembers some good tricks.
Here's some anecdotal evidence: Foreclosures were 35% of the sales in LA county according to DataQuick last month. Now who is buying those houses and why? My second mortgage broker provides the answer. When I asked her how business was she told me she's keeping busy financing folks who are buying up every foreclosed rathole they can afford running in cash contractors for a quick clean up and renting them out.
Now why would they do that?
The answer should be obvious.
They are not making any more land in close to urban centers where the jobs are now and will be found in even heavier concentrations as transportation becomes more expensive or even impossible as the Feds abandon Amtrac and the roads disitegrate.
This 'housing crisis' is not a new thing I've been through 7 or eight...lost track. Too be sure they were a lot smaller than this one but the solution is known. Buy up the 'damaged assets' and wait until the market rebounds as it will. People will always need housing.
The apparent problem is Obama's playing to the idiot policies of the Republicans. I had my doubts about his 'bi-partisan' approach and was roundly vilified for same during the campaign but have tried to remain optimistic. Is Obama trying to mousetrap the Republicans. Who can say?
If he caves to the Republicans on this tax cut crap the party will come to an abrupt end. The 'stimulus package' as it seems to be now, we don't really know yet, will be a failure because if fails to address the root of the financial problem.
The free fall in housing valuation.
The solutions to most all of our problems are, as President Obama has said many, many times, known. The root cause remains.
The insistence of a small band of idiots, and if you listen to such as Cornryn you will see what I mean, who are trying to salvage what remains of their party at the expense of the rest of us.
In short, the problem is political.
Is Obama tough enough to win this fight?
Guess we are gonna find out, eh?
'When you see a rattlesnake poised to strike, you do not wait until he has struck to crush him.'
snapping up foreclosures
now that is very interesting. New wave of "slum" landlords?
Yeah, read Tony's link to some of the well known left political bloggers on Obama and the financial sector.
Myself I am interested in what works and it does seem both left-right are extremely pissed about the massive amounts of money as well as their is not consensus it eased the credit crunch, although some (Calculated Risk, Bonddad)are saying it did.
My problem with nationalization
As was mentioned...it's the day after I am concerned about. My fear is that (assuming this mess gets fixed) down the road that many of these banks will:
A) Not be re-privitized, though I have no qualms having Uncle Sam own a small percentage.
B) That Nationalized Banks will be "above the law" later on, oh sure we'll usher in much-needed regulations, but what happens when certain institutions get special dispensations.
C) That these institutions become nothing more than employment opportunities for party partisans....hey I'm from Chicago, it happens!
D) That we get the wrong people (not like those who ran the bank before were any good) because of the above, and instead of a bank we have another heavy collar to hang around the American tax payer.
Look, Commercial Banking should have always been a financial utility, with Glass-Stegal never being repealed. Investment Banking should have been the profit centers like they always have been, BUT, with much better oversight. Instead we had Commercial banks pretending to be the end all and be all to both retail customer and the investment banking side. Investment bankers went way beyond what already made them money, and bit off more than they could chew. There is a place for everything, a balance you could say. What we had was chaos.
If we are to nationalize this bank or that bank, then all I ask is that we do this pragmatically and put in the right regulatory infrastructure and personnel.
If we were Sweden or Europe or Canada
I'd feel much better about it but honestly I don't know what the right thing is because so many things the government gets involved with are corrupt as hell. The amount of billion dollar DHS contracts is astounding and even more astounding they didn't get jack for what they paid for and even further astounding is that often the technology wasn't even ready to get out of a lab, never mind deployed.
There is not only economic fiction, but also engineering fiction. ;)
Generally the DoD contracts are insider trading games and we saw the phenomenal waste in Iraq.
We have no indication Obama, esp. from his Cabinet, could root out those levels of corruption to run such facilities efficiently either.
I mean I get the impression he wants to do a great job but sometimes the system can eat them alive, a beast of it's own.
Christ, they cannot even appropriate infrastructure project money on what actually makes the most sense as noted by BruceMF.