Wednesday, February 18, 2009

The Measure of Our National Distress

In this video clip, Senator Lindsey Graham (R-SC) admits that we may have to nationalize the banks, and my own Congressman, Pete King (R-NY), is open to the idea. Rep. Maxine Waters (D-CA), who is as far off in left field as anyone in Congress, says with great satisfaction, "We've come a long way!" Yes, Congresswoman, but it's not progress. It's plummeting.

Actually, when Pete King is seriously entertaining the notion of nationalizing banks, it makes me wonder what they know that I don't know.

The Economist is also talking along those lines.

Here is an excerpt from this week's cover story, "The Obama Rescue," which it calls "a huge wasted opportunity in the economic crisis."

America cannot rescue the world economy alone. But this double offensive [the stimulus bill and Geithner's proposed fix for the financial system] by its biggest economy could potentially have broken the spiral of uncertainty and gloom that is gripping investors, producers and consumers across the globe.
Alas, that opportunity was squandered. Mr Obama ceded control of the stimulus to the fractious congressional Democrats, allowing a plan that should have had broad support from both parties to become a divisive partisan battle. More serious still was Mr Geithner’s financial-rescue blueprint which, though touted as a bold departure from the incrementalism and uncertainty that had plagued the Bush administration’s Wall Street fixes, in fact looked depressingly like his predecessors’ efforts: timid, incomplete and short on detail. Despite talk of trillion-dollar sums, stockmarkets tumbled. Far from boosting confidence, Mr Obama seems at sea.
They explain that a fiscal stimulus without fixing the financial system cannot bring lasting economic recovery. But the bad news is: "The scale of troubled loans and the estimates of likely losses—which are now routinely put at over $2 trillion—suggest many of the country’s biggest banks may be insolvent."
The Economist proposes "some form of 'bad bank' for toxic loans (with temporary nationalisation part of that cleansing process, if necessary) and guarantees to cover catastrophic losses in the “good” banks that remain." Of course, nothing is temporary in a Democrat power grab. The scary thing is, sadly, there may be no choice.
Feb. 24, 2009 update: In today's Wall Street Journal ("Bank Nationalization Isn't the Answer"), William Isaac, chairman of the FDIC from 1981-1985, says, "People who should know better have been speculating publicly that the government might need to nationalize our largest banks. This irresponsible chatter is causing tremendous turmoil in financial markets. The Obama administration needs to make clear immediately that nationalization -- government seizing control of ownership and operations of a company -- is not a viable option."

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