Here is an article from the London-based Financial Times.
I highly doubt that this publication is produced by the 'liberal media'.
Bank nationalisation gains ground with Republicans
By Edward Luce and Krishna Guha
Published: February 17 2009 19:44
Last updated: February 17 2009 21:31
Nationalisation, long regarded in Washington as a folly of Europeans, is gaining rapid ground among US opinion-formers. Stranger still, many of those talking about federal ownership of banks are Republicans.
Lindsey Graham, a Republican senator for South Carolina, said that many of his colleagues, including John McCain, the defeated presidential candidate, agreed with his view that nationalisation of some banks should be “on the table”.
Mr Graham said that people across the US accepted his argument that it was 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 [nationalisation],” 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 [without gaining public control]. That’s what the Japanese did.”
Barack Obama, the president, who has tried to avoid panicking lawmakers and markets by entertaining the idea, has recently 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 their balance sheets. “In limited circumstances the Swedish model makes sense for the US,” said Mr Graham.
Mr Obama made it clear last week that he favoured this model over the piecemeal approach taken in Japan, which many would argue is the direction US public policy appears to be heading.
“They [the Japanese] 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.”
Senior administration officials acknowledge that the financial 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 so, 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 economic policymakers of all leanings.
“If necessary you temporarily nationalise some of these institutions,” said a former senior Republican policymaker. “There has been a lot of pussyfooting around because we don’t like the word – which strikes me as utter nonsense.”
The time for biting the bullet may be fast approaching. In early April, big institutions publish their first-quarter results. If Treasury stress tests have not yet revealed the true state of their balance sheets, first-quarter results might 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 officially opposed to control. Mr Geithner last week said: “Governments are terrible managers of bad assets.”
Others say Mr Geithner may have 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.”
Copyright The Financial Times Limited 2009
It certainly seems to becoming more apparent that conservatives want to privatize profits and socialize losses. This is something that has been talked about for some months now.
ILWU workers in San Pedro are finding fewer hours available. Far too many businesses in San Pedro are struggling. But I guess if you own shares in major banks, you are looking good to conservatives and centrist Democrats.
I hope you all remember R. Reagan's 'trickle down' economy and supply-side economics. It finally resulted in what happened on September 15, 2008, when the collapse of Lehman Brothers almost caused the collapse of the basic financial engine that was already sputtering and already causing far too many folks in OUR community anxiety, aggravation, and fear.
I also would not consider Bloomberg News, The Financial Times, The Wall Street Journal, CNBC, Fixed Noise, Barron's, and other media organizations as being "the liberal media".
The socialisation of the banking industry looks like another issue where far-right thinkers meet up with far-leftists on the back side of the political circle. Both groups now seemed joined together similar to their positions taken concerning NAFTA, CAFTA, and a few other issues.
Unfortunately OUR community needs to ponder how we are all going to get ourselves and each other out of this mess.
Should we accept 'inclusionary' housing at Ponte Vista to be more in line with Mayor Villaraigosa's housing initiative?
Must we put our much delayed Waterfront Expansion Plan on hold for too many more years?
Do we have to watch as San Pedro's downtown fights for its very survival?
President Obama signed the stimulus bill into law today. I wonder whether San Pedro will benefit from it or whether OUR community's residents will get real relief.
I did get a laugh from two members of the House of Representatives who both boasted of the benefits coming from the new law into their Districts. The two of them were of course, Republicans and we all know that no Republicans in the House of Representatives voted for the package.
Partisanship reigns supreme just like it did when the Republicans had both houses of Congress between 1995 and 2007. Too bad Republicans have such short memories or they would have realized that what you sew, so shall you reap.