Comments on: Nationalizing Banks: Up Remains Down as Greenspan Chimes In

By: DLS

DLS — Wed, 18 Feb 2009 23:52:41 +0000

“Oh, and conflating Detroit's issues with banking solvency creates needless distraction”

I'm not attempting or intending to distract anybody. Issues related to the banks and the “spreading” from banks per se that arise from the consideration of nationalization are similar to and shared with Detroit and other objects of nationalization, and merit mention when, after all, the issue of note is nationalization.

By: fat_stanley

fat_stanley — Wed, 18 Feb 2009 22:06:55 +0000

This is a core issue. Not applying lessons learned from the S&L crisis (which schematically, looks like similar issues were driving similar banking behavior) would be a mistake. But having Greenspan opine favorably hopefully makes it less scary for the more timid. My concern is that if the entrenched opposition succeeds in devaluing the merits of the plan, then its effectiveness will be impaired (See Phelps's work and Lucas's work on the role of expectations in economic behavior). The Obama program needs to work. And it needs Obama to “own” it more forcefully than was the case with Stimulus ver1.0, which played into opposition hands by having Obey and Pelosi fingerprints on it. Oh, and conflating Detroit's issues with banking solvency creates needless distraction .

By: DLS

DLS — Wed, 18 Feb 2009 19:39:30 +0000

Thanks, Pete. [smile, salute]

I still find it of interest that the savings and loan (S&L) lessons aren't being reviewed or even mentioned much, if at all, these days.

And don't forget, over the horizon is the industrial-strength last-resort measures (some of which we'll likely see, anyway, for other political and economic reasons someday) like monetizing the debt and otherwise generating inflation in order to counter if not to prevent deflation. That, and the "carry tax" or the equivalent now, inducing spending by deliberately diminishing the value of currency (or later, other wealth held) with time.

But that's over the horizon. (We're just aware that it's there and may be brought to bear on our economy, and on us, someday.)

In the meantime, we shall see what happens -- with banks (and the currency), with homeowners, with Detroit, with energy in this country...

By: pabel

pabel — Wed, 18 Feb 2009 18:14:16 +0000

DLS — good points, good questions.

By: DLS

DLS — Wed, 18 Feb 2009 17:43:40 +0000

As a non-apoplectic poster, then and now, who has read Greenspan's remarks already,

http://online.wsj.com/public/resources/document...

I still say caution is advised, not only in any decision to nationalize (which should normally be avoided), but with respect to the scope and extent and objectives related to this decision. Will this be a full ownership-and-operation converted-to-public project? What else may (and should not) be attempted related to this, anything and everything related to banking, finance, et cetera? (It's like nationalizing the Detroit automakers and making them not only the experimental lab for politically-favored environmentalist-style projects, but reaching out from there vaguely and broadly and alarmingly into all kinds of related issues like energy policy.) What kind of takeover and future for the banks is foreseen? What other related policy goals, no matter how distant or "bold"? How long would nationalization last? Et cetera.

By: Buck Naked Politics

Buck Naked Politics — Wed, 18 Feb 2009 16:31:46 +0000

Financial Times: Greenspan and Other Free Marketeers Favor Nationalization of Banks (or “Some Banks”)

by Damozel | Not that that’s a bad thing. It does show the posturing up for what it is, of course — not to mention the madness of Michele Balkin. One wishes they’d got there sooner, of course. The Financial Times says:Long regarded in the US as a f…