Blog on the Run: Reloaded

Saturday, February 14, 2009 6:15 pm

Because we were running out of bad news

Filed under: I want my money back. — Lex @ 6:15 pm
Tags: , ,

Paul Krugman guesstimates that the four biggest commercial banks have a combined market cap of $200B — and that’s including shareholder belief in the likelihood of a bailout — and problems totaling about $450B. He adds:

Given these numbers, it’s extremely hard to rescue these banks without either (a) giving a HUGE handout to current stockholders or (b) effectively taking ownership on the part of we, the people. Of these, (a) would be politically unacceptable as well as bad policy — but the Obama administration isn’t ready to go for (b), because it’s not in our “culture”.

I say our culture needs to get over it because the nationalization train left the station at least as far back as AIG, if not sooner.

UPDATE: Now even Alan Greenspan is saying that nationalizing some of the banks may be the “least bad option.” So if Bush used Greenspan for political cover for the 2001 tax cut, I see no reason why Obama shouldn’t do the same if — or when — it becomes necessary to nationalize some banks.

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