Color me dubious in the extreme:
Senate Banking Committee Chairman Christopher Dodd said banks may have to be nationalized for “a short time” to help lenders such as Citigroup Inc. and Bank of America Corp. survive the worst economic slump in 75 years.
While I understand that the Swedes nationalized their banks for a short time, I haven’t seen any sign that the U.S. government is capable of doing something similar. It seems to me that we are still saddled by a number of “temporary” and “emergency” measures, some of them dating back almost one hundred years. Citi and Bank of America are failed concerns and should be liquidated. $90 billion has already been wasted in attempting to prop up their derivative-ridden corpses; what is the point of wasting even more resources to preserve what are clearly a pair of unviable organizations. And if an institution is supposedly too big to be permitted to fail, isn’t that an indicator that it should be proactively broken up in order to prevent failure in one part taking down the entire institution?
Nationalization won’t work. Throwing more money at the banks won’t work. Given that most people are perfectly capable of understanding when a cancer-ridden patient is inoperable and nothing further can be done, it seems strange that so many them find it hard to grasp that the logic not only applies to medical situations, but economic ones as well.
And if you still don’t believe me about the gravity and scope of the situation, perhaps you’ll believe George Soros and Paul Volcker.