NY Times Editorial: Nationalize Them
By Susie Madrak Tuesday Mar 03, 2009 3:00pmThe New York Times stated the obvious this morning:
It is also painfully clear that more of the same black-hole bailouts are failing to restore stability or confidence. Stock markets worldwide tanked on Monday. A growing chorus of economists and commentators — including this page — are urging the Obama administration to adopt a more comprehensive solution: a government-run restructuring, or nationalization.
The government would not only take an ownership stake in firms that require extensive and ongoing bailouts — as it has done with A.I.G. and Citigroup — but also direct control of the weakest ones. It would get a realistic assessment of the assets crippling them and revamp their finances before returning them to the private sector, where they would be smaller and healthier and could start lending again.
We know that many Americans are uncomfortable with the word nationalization — politicians even more so. But each new bailout of old losers only feeds mistrust of the government and weakens public support for the even tougher decisions to come.
Exactly right. As long as the administration postpones the day of reckoning for the banks, using all these pointless stalling tactics to put off the need for the government to simply take over, the market won't bounce back. Everyone knows some (maybe most) of the major banks are already insolvent, and the "bad bank" idea is little more than a joke at this point:
Fears that the world’s economies are even weaker than had been thought ricocheted around the globe on Monday as investors from Hong Kong to London to New York bailed out of stocks.
Losses cascaded from one market to the next as concern spread that government efforts had not been enough to stabilize troubled financial institutions or broader economies. Only by Tuesday morning did markets show signs of stabilizing, with key indexes in Asia showing more modest declines.
But Monday’s losses were bad everywhere, and particularly severe in Europe, where an emergency meeting over the weekend ended in bickering and the rejection of a bailout plea from Hungary.
[...] “It’s pretty despondent everywhere,” said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. “O.K., there are signs that some of the leading indicators have stabilized to some extent, but it’s at a very, very low level, and we’re not seeing corporate investment picking up, or consumers starting to spend again — in other words, the traditional mechanisms by which economies come out of a recession are absent at this time.”
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Make the oil industry next? Our environment is wealth, and we're losing it.
You are correct.
The GOP cry communism as the Federal Government takes their precious little financial system away from them.
I think the biggest fear for them is that the banks will be retooled to serve the public interest.
Right now the big banks are tooled to channel money to the wealthy.
It is a huge cash cow that will be taken from them.
Bailouts are a joke unless you nationalize and replace the bad apples at the top. I'm talking the entire upper tier and the yes men on their board of directors. These people worked hard to loosen the regulations and now they are like crack fiends at the trough of taxpayer monies. They should never work in the banking industry again. If these were Chinese bankers they'd have it much worse.
Unfortunately the AIG swindle might give insight into what a supposed 'Nationalization' might actually look like.
This government is not going to go after the crooks. That is what is needed.
Today Bernanke described the AIG Financial Unit as little more than a Hedge Fund running amok.
Eric Dinallo the NY Insurance Superintendent in charge of the AIG 'takeover' described it as the same.
All of the losses were due to Credit Default Swaps which they are paying off at face value.
Paulson set this scheme because AIG owed his buddies $20 billion in swaps.
There is no morality in having the taxpayer on the hook for these crooks.
As for the banks.
Nowhere is the $140 billion tax dodge given to the banks mentioned, except deep within the 'Stimulus bill'. Where they ok it.
This is a swindle of vast proportions.
Here, Stiglitz with Amy Goodman:
Spanning administrations.
since the corporations own the banks and oil companys and the politicians dont hold your breath waiting for anything to be nationalzed!
... our government!
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Bush and Cheney dictatorial administration...
These corporations have when Global and it really stands for World Monopoly and that is destroying of country and the world..
We have Global (Monopoly) corporations running this country and bleed it of everything we have or own...
Any method of destructing their Criminal Organization would be welcome...
It no longer belongs to the criminals which have been stealing our money. It now belongs to the American tax payers and they should be running it so we can control the policies that are made..
One word for those financial criminals. F... T...
Corporate Oligarchy
You must mean by that, take government back from the Corporations!
Sad but true that in Lincoln's invocation of:
The people have been supplanted by the corporations.
We can't pretend it is what it is not.
.
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Our government Can take them over for,,,, ""NATIONAL SECURITY"" ... The same d... statements Bush has been using to give them their power and our wealth... Bush's father's Carlyle Group has certainly taken control of a lot of corporations and have benefited by Bush's policies...
if america falls to communisim all south east asia will fall!
.
I'll stick with South East Michigan.
the new york times gets it almost right this time
"baning" should be nationalized, "banks" should not be
there is NO reason the public should eat the depbt of these gamblers, they need to eat their own debt, if an asset is woth 1 cent on the dollar the bank needs to eat that 99 cents, NOT us
in addition, the person owing money on an asset needs to have that asset re-assesed and owe against the actual value, NOT the value to which banks inflated that asset's precieved worth
the fed should make loans not the bank, bankers can earn a small commission of a point or two but they do NOT get to gamble with fed money, a bank is for lending and making money from that interest, they are not entitled to gamble fed money in the casino located in las vegas aor wall street
if they don't want to give reneotiate loan value then they are stuck trying to sell the asset on their own with no help from the government and the person owing the money should get first refusal on any sale
next
if a bank can't show best paper on ownership of a loan they cannot foreclose, the person owing the money can claim squatters rights and after 7 years if best paper does not show up the squatter owns all rights
finally
any loan broken into more then one owner have that loan consoldiated to one owner or one corporation that owns the loan, no loans being payed to multiple recievers
and NO TOXIC ASSETS TAKEN OVER BY THE POPULACE
... even though their mostly fictional economy is crashing around their ears.
This is all about "credits" to which we've given the force of law (ie. men with guns will enforce these credits).
Grab a pitchfork; it's time to take our world back.
Nationalization implies a permanent government stake. That's not what we're talking about here. The fed needs to just take over long enough seize a controlling interest and wipe out the existing shareholders. Then dump the management and send the garbage assets into the bad bank. Then sell their equity stake back into the market at a profit. All within a pre-defined time frame of, say, three years.
Problem is that Geithner is from the Fed and he is still beholden to the big boys who are, after all from members of the Federal Reserve. But that shouldn't stop them at this point.
The Obama admin just needs to avoid the word nationalization, which even I as a died-in-the-wool progressive, find strongly distasteful.
The "died-in-the-wool" progressives didn't seem to have a problem with the "nationalization" of fire departments, police departments, retirement funds, the military, or (hopefully) health care - nor do they find these ideas "distasteful."
So the theory is to eat the bad assets and sell only the good assets back to the private sector? But it is imperative that "private" interests still control the financial system for their own profit? Methinks I smell a concern troll.
If President Obama doesn't act boldly & swiftly in this situation, I fear it could potentially undo everything else he is trying to accomplish--it is that huge.
He must do it, and do it now!
Screw the repugs and their repetitive drool of SOCIALISM! Obama needs to blow these blow-hards off and nationalize immediately!
Hell we're all Commies anyway.
Wall Street is in free fall is because no one knows what to expect--if he would just make the decision & do it, the markets will adjust--as it now stands, they are fumbling in the dark...which is the WORST situation imaginable for making stock trades...
The Bush Family has been one of the worst families in our history to destroy our wealth , delete our democracy and burn our constitution in the history of our country...
******************
Spies for Hire: Carlyle Group to Become Owner of “One of America’s Largest Private Intelligence Armies”
AMY GOODMAN: The Carlyle Group is one of the world’s largest and most secretive investment funds. Nicknamed the Ex-President’s Club, Carlyle’s employees have included both President Bush, H.W. and George W. Bush, former British Prime Minister John Major, former Secretary of State James Baker, and former Defense Secretary Frank Carlucci. Amidst growing public scrutiny over its dealings, the company has recently scaled back its holdings in military contractors and its links to controversial political figures.
http://www.democracynow.org/2008/5/19/spies_f...
May 19, 2008
Bin Laden was at one time part of Bush's Carlyle Group along with Saudi Arabia and other groups of the Egyptian's Empire..
*****
Carlyle Group world wide Organization which under the Bush Jr. administration have tried to take control of our planet..
http://www.politicalfriendster.com/showPerson...
”Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable.
The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized and the State will have to take the road which will eventually lead to Communism."
Karl Marx - Das Kapital 1867
...about nationalizing banks but,
..the govt has proven time and again that they can't do shit.
... in enriching itself.
for Sweden and their banking system was in similarly poor condition. On the plus side when they re privatized their banks they got about 90 per cent of their investment back. Good thing it wasn't the French who did it or the idea would get an even worse reception.
Monsieur Guy de Rothschild, meet Francois Mitterand who is going to nationalize your bank, s'il vous plait.
Let's all be real Socialists, when we nationalize a bank, let's disgorge the Fat Cats of their ill gotten gains.
Rather than giving them enormous bonuses.
With the Times coming out for Nationalizing the banks,Bill O'Reilly will be positively beside himself.In a sense these are fascinating times we're living through.Nothing sets disparate ideological principles in more stark relief than the economy.
This meltdown will make or break the Dems for years to come.
For 80 years now, when banks go bad, the FDIC moves in, wipes out the shareholders, shows the management to the door, and finds buyers for the deposits and loans. It works. Works well. The government has to eat the toxic paper.
Granted, the size of Citi and B of A mean we can't just close them, we're going to have to run them for a while, but still, nationalization has worked, and will continue to work. We just get to eat a bigger pile of toxic paper. Like we're not going to get to do that anyway.
The government shouldn't nationalize the banks until they force all of the underperforming banks to go into Chapter 11. Then you take whatever assets still have value and start over. Otherwise all you have is government trying to manage an unmanagable financial situation. And government consistantly proves they are the worst crisis managers.
The situation is not repairable. Imagine this visual -- if you took the entire annual output of the planet at $60 trillion and made that amount the size of a golf ball, the you created a sphere of all the outstanding debt that has built up, that corresponding sphere would be the size of Jupiter. So it doesn't matter if Jesus Christ himself came down to manage this situation: the debt cannot be repaid. Not now, not ever.
Besides nationalizing the banks, we need a whole other way of dealing with each other economically. Paracitic Capitalism has run its course.
Nationalizing the banks is the standard way of dealing with a crisis like this. That's because it works - it restores confidence in the system.
When Japan's economy tanked, they stalled on nationalizing and lost an entire decade of growth. Sweden, on the other hand, nationalized their banking system and recovered quickly.
But Bernanke seems to think that taking such a route would destroy the "franchise value" of the banks. What value will they have if they go belly up? And why should we continue to prop up failing institutions without having a stake in them?
Any other course is sheer folly. It is the uncertainty that is causing the free fall, not the possibilty of an impending "nationalization"--call it a temporary stewardship, if he has to, but just do it!
Kill the zombies, use our resources to prop up the necessary players, while simultaneously buying up the bad assets. We can get them for pennies on the dollar & sit on them until they can be sold for a small profit.
Socialist nationalization or national socialism?
When corporations , the government and every elitist can at anytime have access to your financial funds and your buying habits , then they know what they can squeeze out of you and what items to sucker you into buying..
Why don't the American citizens have access to the Wealthy , elitist , corporations and our government officials financial funds and the buying activities!!!
The same reason we have a Democratic Republic. The general population is a mob. If you argue with that you argue with the Founding Fathers, who were some of the brightest most insightful men in history
The posts I read here are scary. Most of you talk about nationalization as the only logical step. However, there is no guarantee that the government will un-nationalize the banks and there is no guarantee that they will not lust after other sectors of our market until they control it all. If we let this genie out of the bottle we may never be able to put it back in.
If the government gains total or majority control in virtually every sector of our economy (which is a worst case scenario) then our country will fail. The reason the Soviet Union fell was because it could not keep pace with our output of both material and ideas. Keenan predicted this in the "Long Telegram" shortly after the Second World War.
If we let the government start any short of nationalization then we will see a time of no GDP growth, massive mismanagement of our economy and a lowering of our standard of life. The government is a money spending organization not a money making one. To have them manage our economy is doom.
Personally, I do not understand why you hate big business so much. They are by far the largest employers in America, provide virtually all of the necessities and luxuries that we have, allow us the strong and tenacious economy that we have and many other things. Most big businesses are run responsibly and take care of their employees. It is by far the minority that are mismanaged and corrupt. So to condemn big business as evil is to say that you could live without a paycheck (unless you are a government employee or own your own business), have no luxuries and have a weak economy. If you can live with all of those then you can honestly give you criticisms of big business, but for those that can't you are hypocritical and live in a dream world.
My last point: if this country allows a nationalized economy then it will discourage any promising idea or concepts from coming to the forefront. Imagine a world without Windows because Bill Gates was told by some government bureaucrat that his idea was ludicrous?? Would you be posting on this blog? Or what if the same had happened with Ford when he introduced the assembly line concept? Would you be driving a car today? Capitalism is what has made this country as great as it is. Capitalism has allowed us to have a standard of living that is pretty much unrivaled (our poor would be considered well off in most other countries). Capitalism has allowed the American Dream to become a distinct possibility and reality if you are willing to work hard. So for you to sit here and dismiss capitalism as evil is not only hypocritical (you do enjoy the benefits of a capitalist society) but also a coward. You are not willing to stand up and face the economic hard times with grit and hard work. You are sellouts to a system that is proven not to work. You believe in a system that will only lead to harder and harder time until it rips this country apart. Instead of suggesting any meaningful suggestions you would rather simply hand the government the reins of power, shirking away from any personal responsibility, thinking that somehow the government is going to be better than the private sector. You are fools to believe so.
I will no longer be posting on this website because the level of ignorance and foolishness not only make me mad but sad as well. I am glad that none of you are in a position of power because it would be a sad day and a sad future for our country. I wish you all the best and hope that I am proven wrong in my beliefs, though history is against that.
Nationalization really is the end game in all this, and we may as well get it over and done with.
Banks have unknown billions of impaired assets on their books and those assets have to be disposed of in a timely manner. Either they begin to “perform”, i.e., the people who owe the money begin to pay off their mortgages and other loans again; or the loans must be written down. They can't just sit there.
Those write-downs will consume billions of dollars of somebody’s capital. Only the government has the capital needed to get the job done; the private sector can’t do it alone.
Free-marketeers have floated a variety of alternative proposals. But all of them make the assumption that the world is different than it really is. For instance, getting rid of “mark-to-market” only means pretending an asset is worth more than it actually is, and that won’t work. We can’t continue to lie our problems away. And re-timing the recognition of losses won’t work. It could take decades to write down all these impairments. Yet until that job is done, the banking system will remain crippled.
Current common shareholders would be wiped out, of course, but they knew of that possibility when they bought their common shares. IRA, 401(k), and pension plans could be wiped out too, depending on how their assets were invested. The PBGC might take over the pension plans but people could well lose their IRA or 401(k) savings or see them dramatically devalued.
So the idea would be to bite the bullet, nationalize the banking system, write down the impaired assets, restructure the banking system to better serve the public interest, and then re-privatize it as some number of healthy regional competitors.
A re-privatize model already exists: the break-up of Ma Bell into seven healthy regional competitors in 1984. True, Ma Bell was a private company but it was also a near-monopoly, just as a nationalized banking system would be. That experience could at least inform the re-privatization process.
At any rate, the job won’t get done until it gets started. Let’s do it now and get it over with.
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