NATIONALIZATION BY ANY OTHER NAME WOULD SMELL AS SWEET
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)
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Nationalization as takeout, by contrast, puts the government officialdom in charge and ought to involve changes in top management and the board.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.
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.
Labels: Toxic Balance Sheet, Wherefore Art Thou Toxic Balance Sheet
posted by Mike at 6:42 AM
5 Comments:
One thing we need to be watchful of is WHO gets the assets post-nationalization/takeout/pre-privatization/etc.
You can be sure that the vampires are lurking. The ones who sucked the various financial instituions dry and went away, either voluntarily or by "force."
For instance, it would be horrific to see Robert Rubin form a firm that buys these assets on the cheap in the re-privatization process.
This is why it is crucial to me that the right people be at the helm here, because this thing must be done honestly and competently from start to finish. Yes, mistakes will be made by honest, competent people...but at least it won't be another giveway to the kleptoclass, of which Rubin is one of the most prominent members.
Applesaucer
On the news this morning, our local Mayor Ron Kirk seems to be getting a White House appointment.
It turns out that he's been forgetting to pay all of his taxes.
A ivory tower expert was consulted and he said that forgetting to pay your taxes is just a boo boo. It's not big deal.
Ron Kirk will not be paying interest or penalties.
I guess if you're a politician, not paying taxes is a simple mistake with no repercussions.
For the rest of us, the IRS treats like the scum of the Earth and uses it as an excuse to gouge us in interest and penalties.
Politicians are very special people with special rights, and different laws than the rest of us are chained with.
As to AIG's bailout... I agree with the sentiments here. I find it hard though to become interested in reasonable solutions, because I don't believe that any of them stand a chance of being implemented.
Mike knows I've been arguing years that the US was being set up for and IMF style austerity program. We seem to be on schedule, and it's going exactly to plan.
Do some research on Argentina and despair. We're doing exactly what they did in 2001. We're bailing out the same banks. Talking about exactly the same forms of nationalization. We're watching our manufacturing die, exactly the same way there's did. We're suffering from the same tightening of credit, paralyzing our economy, exactly as it has occurred in Argentina.
The USA uses 20% of the world's oil. It produces only a fraction of that. If the US economy is destroyed, then that oil is freed up to be used in other nations, to improve their economies.
The wealthy that own the international corporations involved can live anywhere in the world, quite comfortably. They owe us no allegiance. They know us and they don't care about us.
This is triage in action. We are making the cut.
In the meantime, the UAE is rapidly ramping up their manufacturing and chemical industries. Citigroup is financing quite a bit of this activity. I guess they are using bailout funds to do this.
It won't be long before the UAE will no longer need other countries to make most of their products. They won't need to sell much of their oil. they can use it for domestic purposes and keep their royals living in high style.
I guess if you're a politician, not paying taxes is a simple mistake with no repercussions.
Apparently, it's also a prerequisite for getting a job with this administration.
This is why it is crucial to me that the right people be at the helm here, because this thing must be done honestly and competently from start to finish. Yes, mistakes will be made by honest, competent people...but at least it won't be another giveway to the kleptoclass, of which Rubin is one of the most prominent members.
Exactly. Someone with a degree of independence. Someone who'll try to insist on a reasonable price. In other words, no fire sales if the market isn't ready to start buying. In that event, just hold on to the assets until a legitimate buyer shows up.
No repeats of the no-bid contracts we've seen in Iraq.
if you're a politician, not paying taxes is a simple mistake with no repercussions.
For the rest of us, the IRS treats like the scum of the Earth and uses it as an excuse to gouge us in interest and penalties.
And of course, the most notable tax cheat heads the governmental department that collects the taxes.
I guess if you're a politician, not paying taxes is a simple mistake with no repercussions.
Apparently, it's also a prerequisite for getting a job with this administration.
Good one.
Speaking of vampires, here are some of the Countrywide variety:
http://www.nakedcapitalism.com/2009/03/former-countrywide-officers-seek-to.html
Applesaucer
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