paul krugman has been talking about this question for weeks. his view, which i agree with, is that the administration should just suck it up and say if the auditing process that's about to get underway reveals that the banks in general--or even a specific cluster of them---are in fact not only in bad shape, but in worse shape than has so far been thought, then they'll be nationalized. the reason i agree with this idea is not so much that i think nationalization is a magic bullet, but rather that there needs to be longer-term plans in place that shape what the administration is doing--and which add a level of transparency to that doing by providing at the least a political objective/set of objectives relative to which stuff can be judged. my main problem so far is that obama's administration has been hit with so much shit so fast that they've had little choice but to be reactive--not as badly as were the bush people, but still.
the problem here is that because there was no clearing space for derivatives trading, no-one has any idea what the devices are or are not worth at this point--not really.
because that's the case, there's nothing like an accurate assessment of the state of affairs within the banking system.
it is not an option to allow collapse because institutions are so intertwined with each other at this point that allowing one to fold could well be writing off an entire sector, and this for no purpose (expect that it enables one to keep talking in outmoded neoliberal terms about stuff like moral hazard).
so nationalization seems a reasonable next step to at least talk about as the process unfolds of trying to use audits to determine what's actually going on with the banking system--to the extent that it can be determined in a quick and accurate manner (no mean feat)...why would you undertake the audit if you aren't going to say what will happen next? and this is what i take krugman's main arguments to be. i think he's right.
nationalization is not the only route, but its a good piece of theater for the present situation.
__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear
it make you sick.
-kamau brathwaite
|