Monday, January 19, 2009

Why not nationalise?

...Not really on the list was nationalisation.

But it seems to me, based on an ongoing blogospheric discussion, that nationalisation is the only good option left. The basic problem is this—some banks are likely insolvent. Any option that solves the problem by buying bad assets will either fail (if those assets are bought at face value—recall, the banks are insolvent) or will succeed by buying those assets at well more than they're worth. The latter option is a large and generous gift to the bank's shareholders.

The question is, why would one want to give a large and generous gift to bank shareholders, out of the taxpayer's purse?...


Exactly. And remember, this is from that well-known "liberal" source the "Economist."

Nationalization is the only solution and always was. But the elite want their handouts and politicians abhor doing their actual job of providing oversight in these matters.

This what we do:
We nationalize insolvent banks and then hold onto their toxic waste real estate or put it to work housing the homeless. Later we can sell these banks to other banks once the subprime debris is cleared away. Once the economy stiffens a bit we can unload the real estate at improved market prices. The taxpayer might not even lose anything at all in such an arrangement.

But yeah, that makes too much sense to actually be implemented.

And so it goes...