Greenspan goes Commie

[Der-Lowe]

Comrade Greenspan wants us to seize the economy's commanding heights. says Paul Krugman, writing for the New York Times.

O.K., not exactly. What Alan Greenspan, the former Federal Reserve chairman - and a staunch defender of free markets - actually said was, "It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring." I agree.

First, some major banks are dangerously close to the edge - in fact, they would have failed already if investors didn't expect the government to rescue them if necessary.

Second, banks must be rescued. The collapse of Lehman Brothers almost destroyed the world financial system, and we can't risk letting much bigger institutions like Citigroup or Bank of America implode.

Third, while banks must be rescued, the U.S. government can't afford, fiscally or politically, to bestow huge gifts on bank shareholders.
Let's be concrete here. There's a reasonable chance - not a certainty - that Citi and BofA, together, will lose hundreds of billions over the next few years. And their capital, the excess of their assets over their liabilities, isn't remotely large enough to cover those potential losses.

Arguably, the only reason they haven't already failed is that the government is acting as a backstop, implicitly guaranteeing their obligations. But they're zombie banks, unable to supply the credit the economy needs.

To end their zombiehood the banks need more capital. But they can't raise more capital from private investors. So the government has to supply the necessary funds.

(the article continues)

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I personally don't see any problem with this. As Krugman has argued, the effect of the bankruptcy of banks like City is a cost too high to be payed in the name of an ideology, and the nationalization wouldn't be permanent, so the "inefficiency disease" would not jump from the government to the private companies, since they would returned to private ownership after they had been brought back to normal operation. After all, the government, through the Fed (a defacto government institution), has the duty of "ensure the safety and soundness of financial institutions".

[aviewaskewed]

Whether people want it or not, we're going to have socialization of the banks and probably many other services very soon. The writing is absolutely on the wall when you listen to the administration and a lot of administration friendly analysts and economists talk. But what I really want to see is if we do take such drastic and radical steps is that we FIX IT SO THIS CRAP DOESN'T HAPPEN AGAIN. Or at least can't happen in the same way. This was preventable, but nobody had the balls or the wherewithal to say "the quick money now will fuck us in the long run, so let's stop the quick money scheme now".

[Korriken]

Sad, isn't it? The sheep are soon going to start screaming for the nationalization of many things. Obama will be happy to grant their demand for nationalized banks, healthcare, etc. Then when he realizes that the cost of nationalizing the many services is crushing the budget, he'll have to either have a massive tax spike to pay for it, or find ways to cut the cost. EIther way the economy won't be able to handle the burden of new taxes and cutting the costs will weaken the systems, causing piss poor services.

[MortifiedPenguins]

And just like that, Judas gets his thirty pieces of silver.

I swear, you can't find a free market capitalist that won't go marxist when his holdings are in trouble.

But to be fair, I didn't like Greenspan before and I don't like him now.

[Memorize]

At 2/24/09 01:09 AM, KemCab wrote:

Except the nationalization is only temporary.

Considering what our government has done to the economy since the early 1900's, I highly doubt it.

Why anyone would want such a spending spree, inefficient, debt ridden government to control banks (not like they didn't have enough control already) is beyond me.

[aviewaskewed]

At 2/24/09 01:56 PM, Memorize wrote: Why anyone would want such a spending spree, inefficient, debt ridden government to control banks (not like they didn't have enough control already) is beyond me.

Because most people don't even try to do just the smallest amount of research that even some of the dumbest people to grace this forum has ever done. They see their shit in trouble, they immediately demand somebody who seems smarter then they are (and probably is, just because you might do the wrong thing doesn't mean you're not intelligent in other ways, or overall) to fix it. Obama was elected on the basis that people wanted him to make massive sweeping changes and fix things. So for him to get re-elected (which is of course the most paramount goal for any politician) he has to be seen as doing that. So that's what he's doing, at this point I'm perfectly willing to see it given a try because the BANKS have shown us when you leave them to their own devices they screw up, they've failed, and now they come hat in hand wanting a bail out. To me handing money to people who have screwed up with finances is totally nuts and if the government is going to use our money to save the banks then there should be some kind of oversight. Either the government is more active, or we all get a certain percentage of stock in the banks. Don't just throw good money after bad like KemCab said

[Der-Lowe]

At 2/24/09 01:56 PM, Memorize wrote:

At 2/24/09 01:09 AM, KemCab wrote:

Except the nationalization is only temporary.

Considering what our government has done to the economy since the early 1900's, I highly doubt it.

I think the Republicans will push for re-privatization when things are back on its track.

Why anyone would want such a spending spree, inefficient, debt ridden government to control banks (not like they didn't have enough control already) is beyond me.

Because they don't want the financial system to collapse.

At 2/24/09 11:09 AM, MortifiedPenguins wrote: And just like that, Judas gets his thirty pieces of silver.

I swear, you can't find a free market capitalist that won't go marxist when his holdings are in trouble.

Well, the Citi group is in risk of bankruptcy. One Lehman is enough.

[aviewaskewed]

At 2/25/09 08:12 AM, Der-Lowe wrote: Well, the Citi group is in risk of bankruptcy. One Lehman is enough.

Bank Of America is right there with them I heard.

[fli]

At 2/24/09 03:01 PM, KemCab wrote: Look at Amtrak.

Even some Republicans disagree with Amtrack.... look at Jerry Falwell.

[dySWN]

At 2/24/09 01:09 AM, KemCab wrote: Except the nationalization is only temporary.

Heh. The folks in power always say it's temporary, but really what they're saying is that they don't think that the average voter is smart enough to look at history and call them out on it years down the road when it's still nationalized. One does well to remember that a bureaucracy always resists alteration, no matter how small.

I, for one, am looking forward to the next elections already.

[n64kid]

At 2/26/09 02:27 PM, aviewaskewed wrote:

Bank Of America is right there with them I heard.

The thing is that B of A wouldn't be in such a rut had it not acquired countrywide.

[SmilezRoyale]

One can argue that nationalization is an improvement to the system of free money with no strings... Of course if this is TEMPORARY then the original problem would still remain, or atleast that's what I would assume. Regardless, Nationalization does little to address the problem that the current government system is in little logical position to be lecturing or Nationalizing Banks for the purpose of fixing Bankruptcies and the handing out of bad loans when the government is blatantly guilty of committing both... A nationalization of the banks simply means that the same ordeal would occur but without the risk of business failures.

On another note... I find it strange that people can call themselfs Anarchists and at the same time support every government extension of power imaginable... At least in the feild of economics.

[AntiangelicAngel]

Free market capitalism, in theory, works when people serve their own best interests. This involves both money making and money spending habits. Unfortunately, we're apparently entirely incapable of doing what is our own best interests. Instead, we take stupid risks that are not in our best interests. And we wind up in the crapper.

[blackattackbitch]

Is it just me or are we completely fucked?

I don't know about you guys, but whenever I hear about any government action, my first and foremost thought is the deficit and the national debt. Do we even have the goddamn money necessary to nationalize the banks? But no problem, we'll find the money somewhere.

Seriously though, this should have been handled A FUCKING YEAR AGO! More than a year ago actually, a year and a half ago, before we were classified as being in this recession. Back when the housing market first showed signs of danger and back when oil was fucking {insert arbitrarily large number here} dollars a gallon. Maybe then we could have took care of the housing crisis that sparked all of this mess and we wouldn't have 8% unemployment!

In fact, if I'm not mistaken, Bush was the first one to do something about the looming crisis. You know what his plan was? Handing out money! HANDING OUT MONEY! And instead of getting an alternative plan, we just got a whole bunch of alterations to an already bad plan.

Am I the only one who loathes our incompetent government? Fuck, we could have handled this a fucking year ago, seriously! And all they did is debate about whether we were in a recession yet.

[aviewaskewed]

At 2/26/09 05:41 PM, n64kid wrote: The thing is that B of A wouldn't be in such a rut had it not acquired countrywide.

With all due respect: Who the fuck cares? The result is still the same. They bought a bad bill of goods, and it screwed them (Citi acquired Wachovia which was also having problems) if you are in a bad situation, and you then buy out somebody else in a bad situation and make your situation worse...well, you're still the guy making the bad decision aren't you and the result is still the same isn't it?