Nouriel Roubini, also known as â€śDoctor Doomâ€?, says that the right way to proceed is to nationalize the banking system of the United States. Read more, photos and videos below.
Roubini first talked about nationalizing the banks in a column he wrote in Forbes last week; a firestorm has ensued since then, with even President Obama trying to stifle the rumors of nationalization. Liberals are all for it, Conservatives are against it; so whatâ€™s the answer? Roubiniâ€™s four choices from Forbes:
No. 1: Recapitalization together with the purchase by a government “bad bank” of the toxic assets;
No. 2: Recapitalization together with government guarantees–after a first loss by the banks–of the toxic assets;
No. 3: Private purchase of toxic assets with a government guarantee and/or–semi-equivalently (a provision of public capital to set up a public-private bad bank where private investors participate in the purchase of such assets–something similar to the U.S. government plan presented by Treasury Secretary Timothy Geithner for a public-private investment fund);
No. 4: Outright government takeover (call it nationalization–or “receivership” if you don’t like the N-word) of insolvent banks, to be cleaned after takeover and then resold to the private sector.
Alan Greenspan, former chairman of the Federal Reserve believes that the government taking over the banks is necessary, Ben Bernanke feels that it is certainly an option. Our own government has proven it has no qualms with taking over anything in the private sector. And we have a President who thinks government is the answer. It will probably happen.
The idea would be for government to ride in on a white horse, buy up insolvent banks, restructure and sell them back to the private sector. The only problem with that is, government always has a problem letting go of what they have gotten a hold of. From the Wall Street Journal:
Mr. Roubini tells me that bank nationalization “is something the partisans would have regarded as anathema a few weeks ago. But when I and others put it in the context of the Swedish approach [of the 1990s] — i.e. you take banks over, you clean them up, and you sell them in rapid order to the private sector — it’s clear that it’s temporary. No one’s in favor of a permanent government takeover of the financial system.”
Roubini is a professor at New York Universityâ€™s Stern School of Business, He has his own consulting firm named appropriately, Roubini Global Economics, and right now, everybody in the media wants a piece of him; mainly because he is singing their tune. Iâ€™m not an economist, but the nationalization of our banks would be a major, probably irreversible step towards socialism; we seem to be headed that way as it is.
More photos and a video of Roubini are below.
Roubini Dr. Doom Video