Skip to comments.Dr. Doom: Nationalizing Banks is 'Market Friendly'
Posted on 02/24/2009 12:15:10 PM PST by marshmallow
Nationalizing insolvent US banks is the best solution to avoid a Japan-like scenario in which 'zombie' financial institutions would eat up public resources while the US economy would teeter on the brink of depression, Nouriel Roubini, economics professor NYU and chairman at RGE Monitor told CNBC Tuesday.
Bank shares have fallen on news of abysmal losses and on fears that governments across the world would step in and wipe shareholders out, dragging global stock markets down, but temporary takeover by the state of the sick institutions will insure the survival of the system, Roubini said.
"The market friendly solution is temporary nationalization," Roubini told "Worldwide Exchange".
"Doing something surgical and radical actually may improve the market sentiment," he said. "If we don't do it, we risk ending up like Japan, that had zombie banks for a decade," he added.
Furious banking consolidation that took place in the years preceding the crisis has made matters worse, as it had created banks that were too big to fail but also too big to save, according to Roubini.
The US government has already provided between $7 trillion and $9 trillion in explicit or implicit support for banks, and taxpayers would actually benefit from nationalization, as they wouldn't have to bail out shareholders as well, he said.
"If you don't nationalize them on a temporary basis the fiscal commitments will be bigger," Roubini said. "The alternative is actually a dangerous debt spiral. We risk ending up in a near depression for the US and the global economy if we don't take this radical action as necessary."
Taxpayers could even make a small profit when the nationalized banks will be privatized again, he said.
AIG (NYSE: aig), which is seeking more government cash after getting ready to report a $60 billion loss, the highest in.......
(Excerpt) Read more at finance.yahoo.com ...
Roubini is in fact a socialist.
I'm sure there are more than a few virgins who after having lost it thought if I were celebate long enough and moved to a new city they'd be a virgin again, but it just don't work that way......
A fact. Why he is sourced I can only guess.
the alternative: change the mark to market rule and cut corp/capital taxes
You really do learn stuff on FR.
He has one thing which most of the major players in this mess and the majority of contributors to this board don't.
A track record of some gravitas.
While all were rushing to invest in the stock market and real estate bubbles he was warning of the approaching danger, along with very few others.
That by itself makes him worth a hearing.
He's been right about the avalanche of bad debt and derivatives problems we've encountered. Of course, the problem is that one can be very right about the problem and equally wrong about the solution. Marx was right when he said the harrowing conditions under which the industrial worker labored were unsustainable, and wrong when he said the solution was armed revolution.
Roubini is calling for the rapists to handle the victims recovery. Absurd.
He's is like any other stopped clock doom-sayer socialist and there have been hordes of them over the decades.
I saw the writing on the wall as did thousands of other well informed people. Why does Roubini have gravitas? Because the media loves socialists. It is the same reason they interview atheists, Greens, PETA people, professors who suggest aborting born children, etc. They want to destroy our way of life.
I regularly flush the kind of gravitas Roubini has.
I would reread Marx. You've drawn the wrong inferences. Marx expounded upon a narrow time period during the history of the island of England. The “harrowing” conditions of the industrial worker were a major improvement over the harrowing conditions of the agricultural worker. The conditions of workers just kept getting better and still are.
Marx got it all wrong.
Are you a college student?
Sure. We all saw it coming didn't we?
Last summer we were overrun with predictions of disaster in September. Right.
Thankfully, this site has a search function and it's possible to distinguish the Monday morning quarterbacks from those who really saw it coming.
Roubini predicted over $1 trillion in losses for banks and he was laughed at. Turns out he was on the low side with that estimate. Whatever Roubini's political leanings, he sure saw through the mist better than Bernanke, Paulson and Bush.
Call me when Roubini calls the bottom and I will be impressed. Don't you wonder why the liberal media love pessimists? They call them realists, but then report on socialist policies as realistic as well. Get the picture?
They hate capitalism, the free market and individual liberty.
Ironic that you focus on Bernanke, Paulson and Bush (who all share some blame), but ignore the Democratically controlled Congresses and Democratic Presidents who created the debacle.
Marshmallow, you are aptly named.
What's that got to do with Roubini's insights on the economy?
Post a link or two to the article of your choice which shows anyone who called this any better than "socialist" Roubini.
Let’s accept your supposition that Roubini called it not just right, but the best of any prognosticator out there.
Any Austrian economist would have and did say the same things. The difference is Roubini is a Clinton insider from Harvard. So he is thrust to the front. The myth and media darling all at once.
The danger is not in his prognosticating, but in his policy making. The Austrians know how to fix it. Roubini and socialists in general only know how to make it worse.
So what's the Austrian fix for this problem?
Whom do you take seriously, Jason?
Apart from yourself.
Lots of people and lots of institutions - career civil servant regulators, heads of major financial institutions, leading investors, financial journalists with their feet on the ground, sound economists with a sense of history and empirical reality, etc. Not doommongering men on streetcorners in washboards seeking fame, or ideologues grinding their axes and peddling their snake oil, or ignorant pols playing to the idiot galleries. You know, men with actual responsibilities or sober objectivity. Little things like that.
The US treasury, the federal reserve, the FDIC, all the major banks and wall street firms, foreign and domestic, the major investment houses, Barrons, Bloomberg, etc. Adults.
Packs of crying children should not be allowed within 500 miles of economic policy.
Lehman......Bear Stearns......Merrill.....AIG......Citi.....Madoff........Zombies......insolvent, defunct losers......
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