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post #1 of 57 (permalink) Old 02-18-2009, 08:29 AM Thread Starter
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We are all Socialists Now

Bank nationalisation gains ground with Republicans
By Edward Luce and Krishna Guha
The Financial Times
Published: February 17 2009 19:44 | Last updated: February 18 2009 01:07

Long regarded in the US as a folly of Europeans, nationalisation is gaining rapid acceptance among Washington opinion-formers – and not just with Alan Greenspan, former Federal Reserve chairman. Perhaps stranger still, many of those talking about nationalising banks are Republicans.

Lindsey Graham, the Republican senator for South Carolina, says that many of his colleagues, including John McCain, the defeated presidential candidate, agree with his view that nationalisation of some banks should be “on the table”.

Graham says that people across the US accept his argument that it is untenable to keep throwing good money after bad into institutions such as Citigroup and Bank of America, which now have a lower net value than the amount of public funds they have received.

“You should not get caught up on a word [nationalisation],” he told the Financial Times in an interview. “I would argue that we cannot be ideologically a little bit pregnant. It doesn’t matter what you call it, but we can’t keep on funding these zombie banks [without gaining public control]. That’s what the Japanese did.”

Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has moved more towards what he calls the “Swedish model” – an approach backed strongly by Mr Graham. In the early 1990s Sweden nationalised its banking sector then auctioned banks having cleaned up balance sheets. “In limited circumstances the Swedish model makes sense for the US,” says Mr Graham.

Mr Obama last weekend made clear he was leaning more towards the Swedish model than to the piecemeal approach taken in Japan, which many would argue is the direction US public policy appears to be heading.

“They [the Japanese] sort of papered things over,” Mr Obama said. “They never really bit the bullet . . . and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time.”

Administration officials acknowledge that the rescue plan unveiled by Tim Geithner, Treasury secretary, last week could result in the temporary nationalisation of some weak banks.

The plan sets out a framework for revealing the extent of the likely credit losses facing banks. Most private sector analysts believe the exercise will reveal that some banks have large capital shortfalls.

Policymakers acknowledge that if this is indeed the case, it will be difficult for those with the largest shortfalls to raise the required equity from the markets, in which case the government would probably have to take temporary control. Moreover, while nationalisation remains taboo in some political circles it is increasingly openly discussed among past and present economic policymakers of all leanings.

“In this country nationalisation of some banks – not the whole banking sector – should be a last resort, but it should definitely now be on the table,” said David Walker, head of the pro-free market Peterson Institute and a former senior official in the George W. Bush administration.

The time for biting the bullet may also be fast approaching.

In early April, big institutions will publish their first-quarter results. If the intervening Treasury stress tests have not by then revealed the true state of their balance sheets, then their first-quarter results may do so.

“The first week in April – that’s when the children’s party is over,” says Chris Whalen, co-founder of Institutional Risk Analytics. “That is when the obvious will become apparent.”

The Obama administration remains opposed to federal control. Mr Geithner last week said: “Governments are terrible managers of bad assets.”

Others say he may eventually face no choice. “The danger we face is a Freddie Mac/Fannie Mae scenario where government gives the banking sector guarantees and then socialises the losses,” says Adam Posen, an economist. “That’s the worst thing we could do.”

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #2 of 57 (permalink) Old 02-18-2009, 08:32 AM
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Whoa, Alan Green-FN-span...

The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times. In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire capitalism, said nationalisation could be the least bad option left for policymakers. "It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring," he said. "I understand that once in a hundred years this is what you do."


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post #3 of 57 (permalink) Old 02-18-2009, 08:47 AM
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Is anyone surprised?
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post #4 of 57 (permalink) Old 02-18-2009, 09:38 AM Thread Starter
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I think it is utterly heartbreaking to see that the ultimate result of the presidency of George Bush is starting to look like the destruction of the United States.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #5 of 57 (permalink) Old 02-18-2009, 09:42 AM Thread Starter
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Well, here you go, Germany has just nationalized it's banks:

TOPWRAP 4-Bank woes forces Germany into nationalisation law

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #6 of 57 (permalink) Old 02-18-2009, 09:50 AM
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Originally Posted by FeelTheLove View Post
I think it is utterly heartbreaking to see that the ultimate result of the presidency of George Bush is starting to look like the destruction of the United States.
The Republican mantra now is that the Trillion is nothing more than theft by the 'rats. I can't wait to see how this plays out. If the Trillion turns out to be money ill spent, then GW will look like a hero compared to BO. Then again, if the Trillion saves us, the "I told you so's" will come in spades and the era of "anything Barry wants, Barry gets" will ensue.

I actually think the Trillion may do some good. If that happens I guess I will have to convert. Is there a kit you can buy? Magic underwear or a special haircut? I got my dog neutered and now he's a democrat. The traitor.
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post #7 of 57 (permalink) Old 02-18-2009, 09:51 AM
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I think it is utterly heartbreaking to see that the ultimate result of the presidency of George Bush is starting to look like the destruction of the United States.
I agree it is heartbreaking. However, I think there is a lot of blame to go around. Bush, Cheney, Barney Frank, Pelosi, the whole lot of them. Disgusting and heartbreaking.
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post #8 of 57 (permalink) Old 02-18-2009, 09:55 AM
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We get the government we deserve, don't we...
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post #9 of 57 (permalink) Old 02-18-2009, 09:58 AM Thread Starter
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It is the end result of the basic philosphy of George Bush. The "ownership society". The idea that "the marketplace" is something that will "regulate itself". The appointment of numerous foxes to watch each and every hen house doing government regulation. Seeing Congress as "the enemy" instead of as an equal branch of government. The incestous relationship between his Treasury Department and the now-failed megabanks. The turning over of the Executive Branch to their lobbyists. The criminal act of lying us into a war where we wasted the money we now need badly. The results is a disaster we may never recover from.

Recall that earlier generations faced down fascism and communism not just with missiles and tanks, but with sturdy alliances and enduring convictions. They understood that our power alone cannot protect us, nor does it entitle us to do as we please. Instead, they knew that our power grows through its prudent use; our security emanates from the justness of our cause, the force of our example, the tempering qualities of humility and restraint.

-President Barack Obama, 1st Inaugural address
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post #10 of 57 (permalink) Old 02-18-2009, 10:04 AM
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Originally Posted by FeelTheLove View Post
It is the end result of the basic philosphy of George Bush. The "ownership society". The idea that "the marketplace" is something that will "regulate itself". The appointment of numerous foxes to watch each and every hen house doing government regulation. Seeing Congress as "the enemy" instead of as an equal branch of government. The incestous relationship between his Treasury Department and the now-failed megabanks. The turning over of the Executive Branch to their lobbyists. The criminal act of lying us into a war where we wasted the money we now need badly. The results is a disaster we may never recover from.
Wow! A page right out of the manifesto. The '60's are over, dude.
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