To Nationalize or Not To Nationalize?

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Dave

Dave is a part-time blogger that writes about whatever suits him at the time.

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6 Responses

  1. Avatar E.D. Kain says:

    Dave:

    To reiterate my previous post, I’m more concerned about how something like this gets executed and whether or not government can make a clean exit.

    That just reminded me of Iraq for reasons unknown…Report

  2. Avatar Bob says:

    Regarding nationalization Paul Krugmam writes, “We are not talking about fears that leftist radicals will expropriate perfectly good private companies. At least since last fall the major banks — certainly Citi and B of A — have only been able to stay in business because their counterparties believe that there’s an implicit federal guarantee on their obligations. The banks are already, in a fundamental sense, wards of the state.”Report

  3. Avatar Dave says:

    Bob,

    Duly noted. I don’t recall anyone wondering about leftist radicals hijacking the private sector but I tend to avoid much of the conservative pundit crowd so I wonder if Krugman is invoking a strawman, even if his main argument has some merit.

    That said, I think there could be a difference between a fundamental federal guarantee and nationalization. In a nationalization, I would have to think that the value of the common equity goes to zero (not that I like nationalization per se, but if it does happen, shareholders should be wiped out). I don’t know what happens to the bondholders although I suspect they could face the same fate.

    E.D.,

    Your nihilism is putting a strain on our friendship. We should talk at some point.Report

  4. Avatar Bob says:

    Dave, I just passed the Krugman thing along. Thought it interesting. Yeah, City and BofA hurting. I’m betting on nationalism of the big ones. But not betting much, otherwise another shift at Burger King. Ouch!Report

  5. Avatar Bob says:

    Dave, speaking of ‘leftist raricals,” oh, for example Obama. Lou Dobbs, CNN, just had tape of President Obama and the caption, “Road to Socialism?” Yeah, on the issue of bank nationalism. So much for Prof. Krugman’s “strawman.”Report