When they talk about nationalizing the banks, do they mean all banks, or just those that are in trouble?
They being the press. However there are some economists who believe this has to happen. They say that if the IMF were to intervene in the US, they would demand nationalization of the banks. I have no idea how extensive this nationalization that they are recommending would be.
Of course, the press also is into a kind of preemptive fear mongering, since they seem to bring up the S word (socialism), and they say the Republicans will surely throw that word around like baseballs during pregame warm up.
I am wondering what this all means. How extensive is the nationalization? Will the government replace key employees at the bank? How do they expect bank behavior to change if they do nationalize?
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To answer the overall question first: no…when anyone talks about “nationalization” they are referring only to those banks that are on the brink of failure. Likely candidates would be Citibank and maybe Bank of America.
Second, when we talk about “nationalization” it’s important to note that what we are actually talking about is the government taking a controlling share of the bank, which would then allow it to clean the bank up and then reprivatize the bank. No one is talking about permanent nationalization, and it’s worth mentioning that the US does do this pretty frequently with smaller banks (the process is run through the FDIC). It’s also worth noting that when Sweden wen through a similar banking crisis about 15 or 16 years ago, this is what they did, to great effect.
I don’t even think the press or the government know what they mean. It’s different in everyone’s opinion. Either way, we might as well just go straight communist. Even if the gov only controls the “big banks” it’ll make it impossible for the little ones to compete. They’ll vanish and all that will be left is government control. That’s what happening with all companies that are receiving government bail outs. They’re being reinforced while the small businesses who are also in trouble, get nothing and will eventually die. Small banks get what’s left over in terms of bailout money. It’s the trickle down effect.
I don’t think anyone should get bailout money. If you suck, you fail. Make way for those who can survive and innovate. Meltdown? Maybe that’s necessary. Let’s start completely over and let the free market thrive and take over for once.
Here’s some light reading on the topic:
http://www.time.com/time/business/article/0,8599,1883418,00.html
Don’t listen to Rush Limpdick and his lemmings. This has been going on for decades, beginning with the creation of the Federal Reserve in 1913 and expanded during the Roosevelt years, in particular through the creation of the FDIC. Both of those were good things. Every time a little bank fails, the FDIC seizes it and liquidates its assets. Happens all the time, in good economies and bad. When a big bank goes, you can look at what they did for Continental Illinois way back in 1984, remember, when Reagan was POTUS? The FDIC took 80% ownership, but eventually sold it to Bank of America. It’s private again.
When I looked up at the flag this morning, it was still the Stars and Stripes, not the Hammer and Sickle. Relax. It’s going to be all right.
@ichtheo
Did you are the news article yesterday? The FDIC can soon run out of funds to pay deposit inaugance claims. I’m on my iPhone so I can’t post links.
With big business it is always Capitalism on the way up and Socialism on the way down.
All of the CEOS are wearing Che Guevara tshirts until next year when they will be out of fashion again.
As a stipulation of the bailout banks should be restructured to manageable size and region and so too big to fail becomes- “ok to fail”.
“The duty of government is to leave commerce to its own capital and credit as well as all other branches of business, protecting all in their legal pursuits, granting exclusive privileges to none. ”
Andrew Jackson
I actually would have preferred the government take over the troubled banks. I think it would have been cheaper in the long run.
They may still if things continue to worsen. Of course, it would only be the troubled banks and would only be temporary.
@Michael is right on.
The latest episode of This American Life does a fantastic job explaining it it laymen’s terms.
@IchtheosaurusRex : Oh my god, someone who gets it! Do you think Woodrow Wilson was the worst president ever, too? I must say, I want to have faith in those stars and stripes to uphold what our forefathers wanted for us, but they’re becoming more and more meaningless to me as I get older and learn how the “leaders” of our nation work.
@ubersiren , that honor goes to Warren G. Harding, at least in th 20th Century. Hard to beat Buchanan and Pierce, though, who fight it out for the top honors of all time. For the 21st Century – sorry, but W gets the big sausage.
@IchtheosaurusRex : Oh, yeah well, naturally after W. That goes without saying… or maybe I should’ve said.
No matter what they say, they mean eventual nationaization of all banks.
Liberal government isn’t interested in wrecking an established system only halfway.
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