Greenspan's latest brainstorm

iVillage Member
Registered: 01-14-2008
Greenspan's latest brainstorm
3
Thu, 02-19-2009 - 4:01pm

As if this former fed head hasn't done enough damage!  His latest brainstorm?  Nationalize the banks.  Is he nuts, or is it just alzeimers setting in?  He was against clamping down on Fannie and Freddie when they were winding up this fiasco of sub-prime mortages, now he wants to see the fed control the banks holding the bad paper.


If they nationalize some of the banks I can tell you where my money won't be.  Don't forget the government controlled Fannie and Freddie and started this debacle by pushing them to make loans to "poor" people so they could buy houses.  Then Fannie and Freddie bundled these bad loans and sold them and on and on the cycle went until the whole thing went off the tracks and took our and the world's economy with it.


This is just the guy we need to lead us into total oblivion.  He should just take his bad advise and go quietly into retirment.  The government in control of the Social Security Trust Fund, robbed it blind and spent all the money which they now can't repay and now they want to do away with "entitlements" which is to say they want to do away with thier obligation to pay back the people who contributed.  Kind of like they want to have the banks so they can do away with the "entitlements" of loans that need to be paid by the borrowers.  It shoudl be clear by now, that anything you give the government to run will be ruined not run, and the taxpayer given the bill for their screwups.

iVillage Member
Registered: 01-28-2009
Fri, 02-20-2009 - 12:27pm

http://www.ft.com/cms/s/0/2ad3b750-fd27-11dd-a103-000077b07658.html

Bank nationalisation gains ground with Republicans

By Edward Luce and Krishna Guha

Published: February 17 2009 19:44 | Last updated: February 18 2009 21:57

Long regarded in the US as a folly of Europeans, nationalisation is gaining rapid acceptance among Washington opinion-formers – and not just with Alan Greenspan, former Federal Reserve chairman. Perhaps stranger still, many of those talking about nationalising banks are Republicans.

Lindsey Graham, the Republican senator for South Carolina, says that many of his colleagues, including John McCain, the defeated presidential candidate, agree with his view that nationalisation of some banks should be “on the table”.

Mr Graham says that people across the US accept his argument that it is untenable to keep throwing good money after bad into institutions such as Citigroup and Bank of America, which now have a lower net value than the amount of public funds they have received.

“You should not get caught up on a word ,” he told the Financial Times in an interview. “I would argue that we cannot be ideologically a little bit pregnant. It doesn’t matter what you call it, but we can’t keep on funding these zombie banks . That’s what the Japanese did.”

Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has moved more towards what he calls the “Swedish model” – an approach backed strongly by Mr Graham. In the early 1990s Sweden nationalised its banking sector then auctioned banks having cleaned up balance sheets. “In limited circumstances the Swedish model makes sense for the US,” says Mr Graham.

Mr Obama last weekend made clear he was leaning more towards the Swedish model than to the piecemeal approach taken in Japan, which many would argue is the direction US public policy appears to be heading.

“They sort of papered things over,” Mr Obama said. “They never really bit the bullet . . . and so you never got credit flowing the way it should have, and the bad assets in their system just corroded the economy for a long period of time.”

Administration officials acknowledge that the rescue plan unveiled by Tim Geithner, Treasury secretary, last week could result in the temporary nationalisation of some weak banks.

The plan sets out a framework for revealing the extent of the likely credit losses facing banks. Most private sector analysts believe the exercise will reveal that some banks have large capital shortfalls.

Policymakers acknowledge that if this is indeed the case, it will be difficult for those with the largest shortfalls to raise the required equity from the markets, in which case the government would probably have to take temporary control. Moreover, while nationalisation remains taboo in some political circles it is increasingly openly discussed among past and present economic policymakers of all leanings.

“In this country nationalisation of some banks – not the whole banking sector – should be a last resort, but it should definitely now be on the table,” said David Walker, president of the Peterson Foundation and a former senior official in the George W. Bush administration.

The time for biting the bullet may also be fast approaching.

In early April, big institutions will publish their first-quarter results. If the intervening Treasury stress tests have not by then revealed the true state of their balance sheets, then their first-quarter results may do so.

“The first week in April – that’s when the children’s party is over,” says Chris Whalen, co-founder of Institutional Risk Analytics. “That is when the obvious will become apparent.”

The Obama administration remains opposed to federal control. Mr Geithner last week said: “Governments are terrible managers of bad assets.”

Others say he may eventually face no choice. “The danger we face is a Freddie Mac/Fannie Mae scenario where government gives the banking sector guarantees and then socialises the losses,” says Adam Posen, an economist. “That’s the worst thing we could do.”

iVillage Member
Registered: 03-18-2000
Fri, 02-20-2009 - 2:18pm

>"Lindsey Graham, the Republican senator for South Carolina"<


Ironic that he was one of the 'helping' hands that landed the banks in this current mess.


Nationalising the banks

 


Photobucket&nbs

iVillage Member
Registered: 01-04-2009
Fri, 02-20-2009 - 2:54pm
We have poured hundreds of billions into the banks and it didn't work.