Receivership

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February 20, 2009 8:58 a.m.

From TPM Reader JP

Please stop using the highly inaccurate term “nationalization” which connotes permanent government takeover of the banks. The correct term is receivership, which is by definition temporary and a routine staple of our capitalist economy and banking regulatory system. Using the term nationalization plays into the propaganda of the far right.

As I’ve said a number of times, the term ‘nationalization’ at best confuses the issue, for pretty much the reasons JP says. I’m inclined to say that I don’t want to further confuse the issue by using a different term when this is the one everyone is using already. But perhaps JP has a better point than I realize.

The key is that financial reorganization of failed companies — whether it’s receivership, or bankruptcy proceedings, or something else like it — is textbook rule of law capitalism. If you’re a real free marketeer the real departure is keeping failed companies afloat with a perpetual taxpayer IV line, socializing all the losses and leaving all the upside with people who ran their companies into the ground. It’s not just a raw deal for taxpayers. It also keeps the whole economy in idle.

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