Take over the banks
Comrade Greenspan: Seize the economy’s commanding heights! Here (link) Truly, it’s amazing how compelling the logic of temporary nationalization is. How long will it be before the Obama administration is ready to take the plunge? link paul krugman ,the conscience of a liberal
Um espanto!
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Nationalization fears
So everyone agrees that fears of nationalization>link are driving bank stocks down. That’s probably true, but those fears have to be carefully interpreted.
We are not talking about fears that leftist radicals will expropriate perfectly good private companies. At least since last fall the major banks — certainly Citi and B of A — have only been able to stay in business because their counterparties believe that there’s an implicit federal guarantee on their obligations. The banks are already, in a fundamental sense, wards of the state.
And the market caps of these banks did not reflect investors’ assessment of the difference in value between their assets and their liabilities. Instead, it largely — and probably totally — reflected the “Geithner put”, the hope that the feds would bail them out in a way that handed a significant windfall gain to stockholders.
What’s happening now is a growing sense that the federal government, in return for rescuing these institutions, will demand the same thing a private-sector white knight would have demanded — namely, ownership.
paul krugman
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