Nationalization of U.S. banks gets a new, serious look - International Herald Tribune

Nationalization of U.S. banks gets a new, serious look - International Herald Tribune: "The case for full nationalization is far stronger now than it was a few months ago,' said Adam Posen, the deputy director of the Peterson Institute for International Economics. 'If you don't own the majority, you don't get to fire the management, to wipe out the shareholders, to declare that you are just going to take the losses and start over. It's the mistake the Japanese made in the '90s.'
'I would guess that sometime in the next few weeks, Obama and Tim Geithner,' he said, referring to the nominee for Treasury secretary, 'will have to come out and say, 'It's much worse than we thought,' and just bite the bullet.'"


the good bank, bad bank separation need to be done. banking not working means economy is not working, the longer they decide on, the worse the situation will be; and the less asset would worth, it is a downward spiral.

the gov't could take in all the bad assets, freeze them for 5yrs or so, pay them at the price the banks demanded them. BUT in 5yrs time, if those assets do not worth the price, plus interest,

(interest could be something aligned to the treasury bill rate, or whatever seem appropriate)
the banks have to pay them back.

on the meantime, the economy would start working again, and the banks are given a chance to repent to their crimes, this time do what they can to solve the economy, in order to save their shirt, they have to save everyone else first.

the moral hazard, not voilated.

and the taxpayers' money are guaranteed.

of course, this deal has to stipulated that the banks would not cash out the economy.

so the banks would not be tempted,

1.to revivial only certain economy sectors where the toxic assets are located.
2. earn exorbitant profits to buy back in order to save their skins, while making everyone else worse off.

it seem unlikely to be possible but given how twisted the bank brightest minds are, it is to be safe than sorry.

maybe a review another 3yrs later, that the assets were not inflate to meet the requirement.
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the policy makers cannot make up their minds

because a policy maker is not a banker, a banker is not a policymaker, tho it is not mutual exclusive, but it is ridiculous to ask policy maker to do banker's job, vice versa...

BANKERS need to be part of the solution. in good times, if some guys thinks he deserves millions for his job, then prove your millions are worth it by saving the economy, or are you just a fraud!!