Nationalizing the banks, at this point, is like nationalizing cancer. Nevertheless, it’s looking more and more like it needs to be done, at least with some of them. How would it work? Like this. The government buys the ailing bank loaded down with the toxic subprime garbage loans. The government then splits the bank into two different banks, Good Bank and Bad Bank. All of the garbage loans are unloaded onto Bad Bank, which is allowed to fail. The remains of the institution are in Good Bank, which is presumably a reasonably solvent institution by now. At the point at which Good Bank is ready to fly again, it can be reprivatized. Bank nationalization has been done in many Western countries in recent years, with generally positive results. Who hates it? Capitalists and especially bankers. Stockholders do get creamed, it’s true. Once the government takes over the bank, the remaining stockholders are all wiped out. But who cares what the capitalists think? Who cares what the bankers in particular think. This is the scum that got us into this mess in the first place. Another big resistance to bank nationalization is that in the US this is seen as “socialism.” Despite the fact that we have many socialist aspects our economy, capitalist propaganda has pummeled away at Americans for many decades with S-word to the point where many, possibly most, Americans think socialism is the most evil thing on Earth. Unfortunately, this includes a lot of Democrats. Democrats are not so much afraid of the S-word in and of itself as they are afraid of being called socialists by the capitalists and their party, the Republicans. Nevertheless, the radical right S-word crowd took a serious pummeling in this last election and they may not be electable for some time, if ever. If the Republicans want to win future elections, I think they need to move to the Left a bit or die. Bank nationalization would be much better than Geithner’s “cash for trash” project using taxpayer money to buy up the garbage loans from the banks. On the very far Right, exemplified by the libertarians like Steve Sailer and Ron Paul, some very irresponsible folks are pushing the “nothing is too big to fail” line. I can’t emphasize strongly enough how irresponsible this is. If you can’t figure out why, just think about it. You think this economy is bad now, let those big banks crash down and see how you like the view from the ruins.
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