Not Nationalization, Capitalization
By Barry Ritholtz - March 12th, 2009, 1:30PM
Our quote of the day belongs to John Haskell, who writes:
NO NATIONALIZATION
That’s socialist.
“Capitalization,” now that’s something I think we can all get behind. C and BAC need to be “capitalized.” If the people who put in the capital get 100% ownership, well that’s just how the game is played
You mean like Bear Stearns, Citigroup, Bank of America, AIG and Merrill ?
[ View Post ]
March 12th, 2009 at 9:21 am
Yep… a cap at the front of every name. Good job, BR.
March 12th, 2009 at 1:39 pm
And then let the asshole loan managers continue to CAPITALIZE on the fact that so many people can’t afford to pay their mortgages, the banks own all the worthless assets in the country!
http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html
March 12th, 2009 at 1:43 pm
Yes just like we’re restoring Democracy when we invade a foreign country. Or fighting for freedom when we when we confine people beyond hope of Habeus Corpus. I agree we should capitalize all the banks.
Once that is done I think we should fire everone working there burn their books and shut them down. We can call it something like liberating liquidity
March 12th, 2009 at 2:07 pm
While fully recognizing that words do matter and must be carefully and thoughtfully chosen to reflect true intent of the communication, the fact that there is such a tenacious desire for so many to willfully disregard a simple assessment that if it walks like a duck, quacks like a duck, it is a duck, irrespective of how it is worded, well then I can only surmise that they are complicit in perpetuating this fraud or have had their heads so buried up their arses that hope and desperation form the cornerstone of their investment strategy.
Viewing the finance sub-committee today was along similar lines, up until the last senator spoke who liken the intent to change M2M rules to changing the value of Pi by decree, therefore making it so. No matter how much you want to change by decree, a bag of crap will never become a box of roses.
March 12th, 2009 at 2:14 pm
From today’s Boston Globe: quick bit on prepared remarks by Kenneth Lewis at the Boston Harbor Hotel today. http://www.boston.com/business/ticker/2009/03/lews_calls_bank.html
Really hard-hitting and illuminating stuff. Barry, per Mr. Lewis is among the “misguided” critics calling for nationalization. You and your ilk are misguided because “This is one of those those theories that looks like it might work on paper.” Actually though, nationalization would undermine confidence in the banking system by giving the false impression that banks are insolvent.
Memo to Barry and members of the chattering classes: Insolvent is the new solvent.
March 12th, 2009 at 2:44 pm
Gee, Nationalization worked so well with AIG, Fannie Mae and Freddie Mac, why don’t we do it with other companies in trouble, such as GM, Chrysler, New York Times, Tribune Company, Charter Communications, Level Three, General Growth Properties, UBS, RBS? Since the tax payer already has his checkbook out.
March 12th, 2009 at 3:43 pm
Case in point to my earlier point: William Isaac this afternoon. Good Lord.
March 12th, 2009 at 3:47 pm
Very good nationalization discussion:
http://brontecapital.blogspot.com/2009/03/paul-krugmans-false-logical-step.html
March 12th, 2009 at 3:49 pm
ha!
Thanks Barry!
As for the people who criticize “capitalization” because it “didn’t work” with AIG, Frannie, etc., I have to counter that it’s not “capitalization” if there are endless top-ups of additional taxpayer money while bondholders give up nothing.
As for Rajesh above, I think GGP will be “capitalized” in the near future.
March 12th, 2009 at 4:03 pm
Bear Stearns, Citigroup, Bank of America, AIG and Merrill (and Wachovia) bailouts were each a success compared to Lehman and Washington Mutual, for example.
And the latest, Citi, improves on the precedent, as it involves capital contributions from private creditors.
A good thesis for the next crop of economy PHDs would be to compare the percentage of assets recovered in Bear Sterns compared to the same percentage in Lehman.
An orderly rundown of large banks in trouble assisted by taxpayers capital contributions that duly dilute old shareholders is the least harmful way out of the mess, although it may be more boring and less “heroic”.
Nationalization fundamentalists are promoting a higher level of welfare destruction, for the sake of principles, or ideology, or morals… or for the sake of their short positions…or they really believe the damage will be smaller?
March 13th, 2009 at 9:15 am
Yes lets be true to the American idiocracy. It is the word not the content that is important. Like gay mmm…. unions.
March 13th, 2009 at 11:23 am
I don’t care if they call it Bozo Buckets, just level with us, let’s all take the pain, and get something that actually is stable and works in the future. I wouldn’t even know what it is, but this lack of transparency (on all sides) and Congress’ inability to control the purse strings without hearings/oversight is killing us all slowly.
March 14th, 2009 at 8:01 pm
test