Just heard R. Engle arguing that Banks should be nationalized. N. Taleb and A. Greenspan also defend this solution.What the heck? Economists have turned into communists!Someone f*** up and now they want to wipe out shareholders of healthy banks. What if managers of healthy banks can restructure banks? What if my being a shareholder of a Bank which I believe will survive get wiped out due to lame regulators and lame government actions?Capital is too disperse and atomized! This is a huge problem. Managers think they own the company and are managing for detholders, for the media, screwing shareholders that pay their wages...We need a win-win solution through recapitalization with redeemable shares. Nationalization will increase political risk and slowly wipe-out private investment from all sectors in the economy.Interestingly, A. Greenspan is an employee of DB. Shareholders of DB are paying him a huge wage so he can go to the media and screw them up...

"Owners of capital will stimulate working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism."Karl Marx, in Das Kapital, 1867

QuoteOriginally posted by: BullBear"Owners of capital will stimulate working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism."Karl Marx, in Das Kapital, 1867Yes, so all we're still waiting for now is V.I. Lenin for another stab at implementation...

with government-run insurance (FDIC for instance) to bail banks out, as well as the ability of the banking cartel to print money (the Federal Reserve is a privately owned banking cartel masquerading as a government entity), we do not have free enterprise in the banking system.One could argue that joe sixpack (via the government) is bearing the risks of the banking system while the owners of the banks reap the rewards.Abolish the Fed, end the fiat currency, and restore a sound (privately owned) banking system.

QuoteOriginally posted by: ppauperwith government-run insurance (FDIC for instance) to bail banks out, as well as the ability of the banking cartel to print money (the Federal Reserve is a privately owned banking cartel masquerading as a government entity), we do not have free enterprise in the banking system.One could argue that joe sixpack (via the government) is bearing the risks of the banking system while the owners of the banks reap the rewards.Abolish the Fed, end the fiat currency, and restore a sound (privately owned) banking system.The Fed did its work pretty well actually. Non-keynesians and their envy are screwing the recovery.There's a huge lack of confidence. We need leadership! We need certainty. We need a plan that won't change every week.Ban day-trading and short selling. Recapitalize Banks. Give us leadership. Stop talking about nationalization. We need more private investment. Give us certainty and leadership. Managers will do the job!The only one that did its work fast and seriously was Ben Bernanke!

QuoteOriginally posted by: BullBearThe Fed did its work pretty well actuallySo according to you, we're in this mess despite the Fed rather than because of the Fed.I don't consider allowing massive bubbles to arise followed by a deflationary spiral and financial institutions going belly up by the boatload to be a job well done. QuoteThe only one that did its work fast and seriously was Ben Bernanke!I don't consider allowing massive bubbles to arise followed by a deflationary spiral and financial institutions going belly up by the boatload to be a job well done.

It's common to hear people suggesting that state owned companies (in general, not just banks) is a bad idea. Why?To support it I often heard the argument that private owned enterprises are more efficient than state owned ones. The current situation the so called free-market seems to disprove this myth.Maybe naively I think that provided that the company is well managed, it can be an equaly productive and money making machine either in public or private hands. The problem when the state is involved is that because of the mix between political and economical levels, managers are generally not appointed on the basis of competence but political colours. Saying that in the private world mangagers can be equally selected on the public school they went to or the golf club they attend.In short: why are we afraid of nationalised banks? To me a fully state owned economic system doesn't sound worrying, provided we have a chain of command that makes it efficient. At present I wouldn't worry about who owns what, but what they do with it...

QuoteOriginally posted by: ppauperQuoteOriginally posted by: BullBearThe Fed did its work pretty well actuallySo according to you, we're in this mess despite the Fed rather than because of the Fed.I don't consider allowing massive bubbles to arise followed by a deflationary spiral and financial institutions going belly up by the boatload to be a job well done. QuoteThe only one that did its work fast and seriously was Ben Bernanke!I don't consider allowing massive bubbles to arise followed by a deflationary spiral and financial institutions going belly up by the boatload to be a job well done.Which Fed? Bernanke's Fed or Greenspan's Fed?Everyone messed up including the Fed. Actually, the Treasury f*** up after allowing the collapse of lehman and not solving the issue in Aug07. We all knew that we're in a mess since Aug07.Paulson opened the box of Pandora with lehman. Now, it seems that everybody wants to "wake the beast"!We can't solve the leverage problem in the middle of a crisis! Bernanke did a good job after (and only after) the bankruptcy of Lehman. Edited: PPauper, I understand what you're saying but we can't travel back in time to solve this mess! We have to solve it now in the middle of a stinky crisis.

QuoteOriginally posted by: gcIt's common to hear people suggesting that state owned companies (in general, not just banks) is a bad idea. Why?In short: why are we afraid of nationalised banks? To me a fully state owned economic system doesn't sound worrying, provided we have a chain of command that makes it efficient. At present I wouldn't worry about who owns what, but what they do with it...Under your arguments we should nationalize everything. That's communism and we already know where it leads us."Communism is a political ideology that promotes the establishment of an egalitarian, classless, stateless society based on common ownership and control of the means of production and property in general."Karl Marx posited that communism would be the final stage in human society. Maybe he was right. After hearing economists defending the nationalization of the entire banking system I guess we're near that stage.*I think the quote below is a fake. It looks like an interpretation of the arguments in the "Communist Manifest" (and the industrial revolution) instead of a real quote from Marx in "Das Kapital".

Mn..I think I am more in favour for a sort of national kind of communism.... but I'm not sure how I would call it though... :-)Only joking... I'm not sure it would be communism. Allowing for a company to be managed by the state if this is the most efficient thing to do (keeping in mind not only economic but social utility too) doesn't necessarily means removal of private property.For example, I believe that infrastructures such as schools, transports, health service should definitively be managed by the state because they are fundamental in giving society some sort of cohesion (and a single national rail network is more efficient than many fragmented privately owned railways).... Maybe a type of banks has the same function...

QuoteOriginally posted by: gcFor example, I believe that infrastructures such as schools, transports, health service should definitively be managed by the state because they are fundamental in giving society some sort of cohesion (and a single national rail network is more efficient than many fragmented privately owned railways)....I would say, infrastructure as ... planned and erected. Most of it could be managed and operated by private entities. Tracks, public, trains private.(IMO, even education could be emancipated from centralized public management and operation (at least here in Europe)).I have the metaphor of the hostal for mountain climbers. It shall remain privately owned. Its runner makes it attractive, based on diversified routes, advises, services, technical aids rental, .. The most impressive routes are usually the most risky ones. She would lose business, if (repeatedly) convincing climbing in bad-weather conditions, denying avalanche warnings,.. She gets weather, snow-consistance information,.. from a public service wich usually also manages the mountain rescue. Mountain rescue acts quickly when something happened unexpectedly. They have helicopters, body-detectors, dogs, ...She subsidises mountain rescue by a percentage of her margins. As her colleagues do.

QuoteI would say, infrastructure as ... planned and erected. Most of it could be managed and operated by private entities. Yes, but why? It seems to me that many people want it to be managed by private entities because of ideological reasons. I personally don't care how it is managed provided that the train arrives in time and I don't have to spend a lot of taxes to maintain it.It seems to me that if railways can be made profitable (which is the only reason why a private would like to run them), then they can be made profitable even when managed by the state. But there must be some practical/economic reason why you would like a profitable service to be run by privates instead of the state? (I understand ideology, but I like to think of myself as a pragmatic person and I keep ideology for discussions on Wilmott forums and pub nights).At least in UK I see a railway system managed privately that is very expensive in terms of cost of the tickets, it's unreliable (you never know if your train is arriving in time/late or interrupted by snow, rain, leaves, etc), and I also pay lot of taxes for practically no service (bad transports, poor state education and health service that seem only to specialise in involontary euthanasia).I would seem to me that a nationalised train system would be better than what the privates have managed to achieve here...gc

QuoteOriginally posted by: gcI would seem to me that a nationalised train system would be better than what the privates have managed to achieve here...gcExtremes. Swiss Railway (100% public I think?) serves fantastic. Austrian Railway (100% public!) poor service (customer-service is not bad, but technical organisation, frequency, punctuality,.. poor).German, in the middle. How is this? It depends on the intensity of political interactions. And I do not want to have services dependent on ideologies?!BTW, as Austrian, I find the UK railway sytem great! Yes, expensive booking on time, but cheap, if in advance.

You either believe in capitalism or you don't. I do. But I also agree with others here who have said that we don't have capitalism, certainly not in banking. The most important policy prescription that the believer in capitalism can offer is to treat everything equally and let the price mechanism direct resources to their most productive uses. When you subsidize an activity you end up with too much of it. This is what happened to the financial industry. When you throw off ideological blinkers and take a dispassionate look at it, the financial industry is heavily subsizided through the tax system. That it why it is so profitable and, combined with the moral hazard of having a free put from the government, it is really not surprising that things went overboard and out of control. We need fewer, smaller banks. We need to tax investment income no differently than labour income. We have to rid ourselves of the idea that what we do is particularly important to the world, it is just something else to pass the time we're allotted on this mortal coil. (Oops, getting too philosophical). But now that we're in this mess we have to try to do the right thing. If public money is being used to repacitalize the banking system, well then the public should own it, otherwise we're making the moral hazard problem even worse. The Swedish experience in the 1980's is interesting - they got it right by temporary nationalization, heck they may even have made a profit from it when all was said and done.

QuoteOriginally posted by: gcQuoteI would say, infrastructure as ... planned and erected. Most of it could be managed and operated by private entities. It seems to me that if railways can be made profitable (which is the only reason why a private would like to run them), then they can be made profitable even when managed by the state. But there must be some practical/economic reason why you would like a profitable service to be run by privates instead of the state? (I understand ideology, but I like to think of myself as a pragmatic person and I keep ideology for discussions on Wilmott forums and pub nights).The problem is that governments have no incentives for profitability and generally allow no competition that would motivate innovation, service improvements, productivity improvements, cost reductions, etc. I'm not saying that government can't improve, but it will do so much more slowly than would competing private firms in most cases.The UK rail system is a basket case because it represents the worst combination of semi-public and semi-private management of infrastructure and rolling stock -- semi-public shared infrastructure and competing private train operators. The competing operators have little control over the quality of the infrastructure (and thus little control over service quality) and the infrastructure owner has little incentive to invest in maintenance or upgrades. Contrast the UK passenger rail system with the fully private freight RRs in the US that have been upgrading information technology, adding real-time tracking, and spending billions on building double and triple track across the US to profitably compete with private long-haul trucking.