Let Those Banks Fail!
3/4/2009
Some big guns on the right have joined the left in calling for the temporary nationalization of America’s troubled banks. Among them are former Fed Chairman Alan Greenspan, Republican Sen. Lindsey Graham, consultant and professor Nouriel Roubini, and former Treasury Secretary James Baker.
They are wrong: Nationalization would compound the problems caused by the credit craze that led us to where we are, kick taxpayers in the stomach, and do in a convoluted way what the market would do swiftly.
The banking system is in a humongous mess. Potential losses by U.S. banks on loans and securities amount to nearly $2 trillion. The response by two consecutive administrations-government-funded loans, capital injections and guarantees-has not inspired confidence. The markets know that the banks are concealing the value of their bad assets by not selling them at the low prices investors would offer.
Harold
ACGR's "News with Attitude" 