TPM Reader JA adds this on scary nationalization …
First, we already nationalize banks, although smaller ones than Citi or BoA. Second, you miss an important point. The shareholders in big banks likely to be nationalized aren’t our major concern (yes, I do have some sympathy for them, as I do for anyone whose investments go south). It isn’t the threat of nationalization that has harmed the shareholders, but the irresponsible actions of the banks themselves. We must do something to “rescue” the banks because their failure threatens us all, not just the shareholders. Strive to overcome your fear of a word, “nationalization”. If you want real words to fear, consider “The World’s Most Horrendous Economy Depression Ever And We’re Worried About Shareholders?”
I think JA misses my point about whether I find ‘nationalization’ scary. I think every potential action in the current situation is fraught with danger because we’re in such a bad situation and it is in many respects unprecedented. So there’s no way to have certainty about the outcomes. But nationalization is much less scary than the alternatives. And JA makes the key point that the country as a whole, the economy as a whole, needs a functioning banking sector. So we don’t necessarily have the luxury to wait years to let the big incumbent banks get their house in order, even if we didn’t mind footing the whole bill.
