YOU SAY NATIONALIZATION, I SAY BANKRUPTCIZATION, AS LONG AS WE CALL THE GEITHNER "PLAN" OFF

An excellent post by Barry Ritholz on the "nationalization" issue. As someone said to me, this piece reads like a primer on the topic. But it's a very short, extremely readable primer, so there's no reason not to check it out. A highlight or two:

As Bloomberg’s David Reilly writes, “The nationalization debate is a smoke screen. We’ve already nationalized the big banks. Let’s just accept it and move on” — and I could not agree more.

* * *

why don’t we call it by a more accurate, precise, and less scary name: FDIC mandated, pre-packaged Chapter 11, government funded reorganization.

That is an accurate description of what occurred with Washington Mutual (WAMU) now part of JPM Chase, and Wachovia, now part of Wells Fargo. The Feds step in, seamlessly transfer control of the assets to a new owner, while simultaneously wiping out the debt, the shareholders, and giving a huge haircut to the bondholders.

* * *

What emerges is a clean bank, no debt, well capitalized, and free of deadly toxic assets.

If we do this correctly, we accomplish two or three things at once: re-capitalize the banks . . . but eliminate the moral hazard of bailing-out the banks' current management and shareholders and the moral unpalatability of throwing our money down the drain as we twittle our thumbs and await the inevitable.

Of course, the longer we wait to do this, the less we end up accomplishing, both in terms of positive outcomes and avoidance of the negative. And, most importantly, we need vigilence and oversight all the way to the end, which is something I really worry about. In other words, if we go to the goal line and then sell the re-capitalized banks right back to the same fucking shysters that drove us into the ditch in the first place -- and sell at a grossly discounted rate -- we will have completely rewarded the wrong people. At our own expense.

A FEW BRIEF THOUGHTS ON OBAMA'S SPEECH LAST NIGHT

Let me preface this by saying that I didn't even know he was addressing the nation last night, and therefore I missed the beginning of the speech. So pillory me for my ideas, not for missing something that seems obvious. I also haven't reviewed the transcript.

Nevertheless, now that I've made clear that I'm shooting from the hip, here goes:

1. Obama sure said a lot of the right things. Now let's see if he can do it.

2. On a related note, here's what Mrs. Mike said last night as she half read a book, half listened out of one ear to what was coming out of the television: "This is exactly what he said when he was campaigning. Isn't it time for him to explain how he'll manage to do all these things?"

3. Here's a specific, only it's from me: Obama said he's gonna kick those bad banks to the curb. Make 'em pay, hold 'em accountable! "Accountability starts now!" But from what I've seen of the various "Plans" put forth by Geithner & Summers, that doesn't really seem to be the case, now does it?

Unless I missed something, and Chris Dodd joined the Administration.

4. And on another sorta' related note, I can't explain how irked I was to see Pelosi leap up to lead the standing O on that bank accountability note.

(Yeah, I know, she leapt up all night long. No wonder she has nice legs for a 68 year-old.)

But didn't she stand before Congress back in September, excoriating her colleagues about the urgent necessity to pass the TARP, which is the vehicle by which bankers received bonus money from taxpayers? Fucking lying, rotten-to-the-core, disgusting hypocrite. And since I'm sure Harry Reid and Barney Frank joined her by jumping up and applauding, let me say the same about them: lying, sneaky, pieces of shit.

Anyhow, back to where I was . . .

5. Joe Biden just cracked me up. The fact that he can sit there and make faces, and do mimed "shout-outs" to former collegeagues in the chamber is comedy gold. He's got a few "did he really do that?" moments left in him over the next 4 years."

6. It was nice to watch a SOTU address and not have to listen to Bush inarticulately lie his way through a canned speech. I have to admit it's better to watch Obama articulately spin impossible-to-implement policy through a canned speech.

Small steps people. There's dishonesty and there's dishonesty. Obama's dishonesty is of the standard Clinton-Reagan-JFK-FDR-Lincoln variety. He falls short of that special, lofty territory inhabited only by Nixon & Bush.

7. In sum: I heard a lot of talk about plans that will increase spending, the deficit, and the debt. I believe him. Also lots of plans to reduce spending, deficits, debt.

I'd like to believe him, but I respect logic, math, reality, all that wacky stuff.

So I don't.