Monday, February 2, 2009
To nationalize or not to nationalize
Well I am no longer alone in the wilderness crying out for the establishment of a new national bank. As my reader(s) know, I have vacillated back and forth between nationalizing the banks(some of them) and starting from scratch with a new bank. And by a new bank, I mean a new GOOD BANK. Not a bad bank as proposed by the agents for change within the Obama administration. I really fell for Obama's mantra of change but just a few weeks into this administration I am getting a sick feeling in the pit of my stomach. It is beginning to look like we have replaced and ignorant inarticulate Texan Bushwhacker with an intelligent articulate Chicago charmer with a good jump shot and a cigarette habit who is continuing the same failed economics of the bushwhackers. For me the honeymoon is over. Change? NOT! This is the administration who has given us Tim Geithner, Larry Summers and Robert Rubin...Bankers ALL.Both Geithner and Rubin have made it abundantly clear in the past week what they think of bank nationalization. Rubin is a former Treasury Secretary under Clinton who helped start the current roller coaster ride to hell and who until just a few days ago was senior advisor to one of our largest insolvent banks, Citigroup. If we nationalized the banks, all his buddies might lose their jobs and their money. So Obama has made the decision to stand with crooks, incompetents and bankers or "banksters" as I heard them referred to recently. I was asked by some family this weekend to offer some concrete suggestions for a solution to this mess. I told them that I had offered ideas in this blog which I felt would help individual people to get through this recession or depression but as to a solution.....There will be no immediate solution to 3 decades of enormous credit and debt assumption by consumers, government and business. There will be no solution to the criminally incompetent business models devised by the Wall Street financial establishment which has brought the entire world economy to the brink of ruin. The solution for these bankers in both administrations has been injecting more and more money with virtually no accountability into the very companies that caused this destruction in the first place. Their solutions are to create more lending, more DEBT to solve a problem which was caused by excessive debt and credit in the first place! Classical economics is a failure. The tools used by our Keynesian economists have failed and keeping these assumptions and economists and bankers in positions of authority guarantees continued failure. At best their actions just delay the inevitable. The tools of the greenspans, and the bernankes and the paulsons and now the rubins and the geithners have failed and will continue to fail. The interest rate from the Fed is effectively zero. The interest rate in the UK this week will drop to the lowest rate since the Battle of Hastings. Seriously, the BOE will soon drop the rate to the lowest in 315 years. I am a former ER Doc and when we exhausted all measures to save a dying patient, we quit. We "called the code." When the patient dies, you quit. The banking system of too big to fail banks is dead. They are insolvent. So now what? We quit.I think we meed to look at what we need banks for. They are a place to put and retrieve our money and if we think it's safe to poke our head out like Punxsutawney Phil to borrow a few bucks, they have a function. That is all they really have to do. And I almost fell out of my chair this morning reading that the Business Secretary in the UK, Lord Mandelson has proposed that a new good bank with these fundamental banking functions be established in the UK in the post office! So now you know who the mystery face is up at the top left. What a great idea! Iwish I had thought of it. And despite my trashing of economists, I may have to get behind Paul Krugman who has finally proposed bank nationalization in today's NY Times. It is time for the Obama administration to stop trying to rush through a gigantic stimulus package screaming there is no time to waste. Nonsense. All the government packages so far have been just that:WASTE. There is time. There needs to be time. They need to take the time to think this bailout through and listen to voices of intelligence outside Wall Street and the Beltway. The senate is the last hope. If it takes a filibuster to stop these heedless maniacs, lets have a filibuster. I have always thought of myself as a democrat but these guys are scaring the wits out of me.