Thursday, February 19, 2009

Greenspan Joins The Chorus

The former head of the Federal Reserve Bank and a Republican Senator both said they're not opposed to nationalizing failing banks. The Financial Times reported yesterday:

The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman, has told the Financial Times.

In an interview, Mr Greenspan, who for decades was regarded as the high priest of laisser-faire [sic] capitalism, said nationalisation could be the least bad option left for policymakers.

”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.”

Mr Greenspan’s comments capped a frenetic day in which policymakers across the political spectrum appeared to be moving towards accepting some form of bank nationalisation.

“We should be focusing on what works,” Lindsey Graham, a Republican senator from South Carolina, told the FT. “We cannot keep pouring good money after bad.” He added, “If nationalisation is what works, then we should do it.”

Greenspan Backs Bank Nationalisation

I like Paul Krugman's quote on this:

Truly, it’s amazing how compelling the logic of temporary nationalization is. How long will it be before the Obama administration is ready to take the plunge?

Comrade Greenspan: Seize the economy’s commanding heights!

Actually, I love the title even more than the quote.

It's starting to look like the only people who aren't in favor of nationalizing the banks are the bankers and the White House.


Dana Hunter said...

I'm sure the White House will get there, now that Greenspan's joined the Red Army Brigade. They'd best get a move on while we've got a banking system left to nationalize - when Graham starts sounding somewhat sensible, you know the situation's beyond dire.

Greenspan's about-face was priceless. So was Krugman's title. Again, it's a good thing I'd finished swallowing me soda.

Did you see his Apocalypse Now post? He's really on a tear this week.

(Wow, oddly appropriate captcha: monies. Synchronicity, baby, yeah!)

Cujo359 said...

I hope they do it soon. Obama received quite a bit of support from the financial sector. Despite all the talk of how he did it with small donations, in reality he received lots of large donations, too. He just received a lot of small donations.

Missed the Apocalypse Now post. I'm still getting caught up.