Yves over at Naked Capitalism
addresses some of what we talked about in yesterday's comments thread
. In other words, what "nationalization" really means
in the context of all that's going on:
Bernanke and Geithner believe that the current lousy state of financial markets is the result of irrational pessmimism. If the government throws enough liquidity at the market, animal spirits will return and all will be well.
Nationalism arrived at this way, call it reluctant nationalism, could well make reprivatization more difficult than the more traditional kind (think the FDIC receivership, except the government can't dispose of the assets by Monday, so it has to keep them for a while, perhaps as long as a few years, to figure out what the highest and best exit strategy is for the various components)
* * *
Nationalization as takeout, by contrast, puts the government officialdom in charge and ought to involve changes in top management and the board.
Similarly, reluctant nationalization keeps the behemoth financial firms intact, while the "nationalization as takeout" version assumes stripping out of bad assets, and a possible breakup of the firms. One or both would reduce the size of the remaining entities, which would make it easier to find new management candidates.
This is all a work in process. As long as the ideas keeping flowing, some of them will reach the ears of those who actually wanna do something good for the economy. So long as they're loud and constant, to get through the noise of those who have other goals in mind.
Labels: Toxic Balance Sheet, Wherefore Art Thou Toxic Balance Sheet