I don't know how to get that into a blog, but "JesusFuckingChrist, what the fuck is happening here?"
Senator Lindsay-whining about the stimulus-Graham has come out in favor of nationalizing the banking system... As Maxine Waters said, "We have come a long way ." Oh, and the panelist opposed is...Chuck-the Senator from Wall Street - Schumer. The discussion was prompted, at least in part by an OP-Ed in the post from Doctor Doom himself. Now, despite his doctrinaire performance in the stimulus package, and the pandering to the right wing-nuts during the McCain campaign, I've always thought that Lindsay Graham had a core of intellectual honesty. And, despite my general preference for Democrats, I always thought that Chuck Schumer was a sleazy, oily bastard, the Jewish Al Damato. So, nice to see I was right.
In the interest of who gives a fuck full disclosure, the AXE gets Roubini's daily newsletter, and I gotta say, he's nothing if not pragmatic. In the OPED, written along with another professor from the NYU business school, he says:
As free-market economists teaching at a business school in the heart of the world's financial capital, we feel downright blasphemous proposing an all-out government takeover of the banking system. But the U.S. financial system has reached such a dangerous tipping point that little choice remains. And while Treasury Secretary Timothy Geithner's recent plan to save it has many of the right elements, it's basically too late. The subprime mortgage mess alone does not force our hand; the $1.2 trillion it involves is just the beginning of the problem. Another $7 trillion -- including commercial real estate loans, consumer credit-card debt and high-yield bonds and leveraged loans -- is at risk of losing much of its value. Then there are trillions more in high-grade corporate bonds and loans and jumbo prime mortgages, whose worth will also drop precipitously as the recession deepens and more firms and households default on their loans and mortgages.
Now, as a guy who thinks in terms of systems and the inter-weaving of systems, I find this persuasive and kind of scarey. Obviously, Graham does too. Will be interesting to see how this plays out over time...like the next month. Roubini's article was called, "Nationalize the Banks! We're all Swedes now!" which is interesting. I'm not an economist, although I have pretended to be one as an academic and often try to discuss economic issues here. Still, this is very troubling, and now I need to read up on the Swedish banking crisis of 1992...which sounds a lot like trying to solve the Global War on Terror by reviewing the Navajo wars of the 1860s. Kinda, sorta like that but not actually all that similar...
Nationalizing banks is not without precedent. In 1992, the Swedish government took over its insolvent banks, cleaned them up and reprivatized them. Obviously, the Swedish system was much smaller than the U.S. system. Moreover, some of the current U.S. financial institutions are significantly larger and more complex, making analysis difficult. And today's global capital markets make gaming the system easier than in 1992. But we believe that, if applied correctly, the Swedish solution will work here.
Exactly. Now, in economics and business there is a concept called economies of scale. Roubini alludes to that, by mentioning that, oh yeah, the US system is bigger and more complex. He also points to the fact that globalization makes gaming the system easier...and, he points out that the Swedes didn't build a big bureaucracy to do that, "it delegated all the details of the cleanup to private bankers and
managers hired by the government. The process was remarkably smooth."
Yeah, you might be beginning to sense some of my concerns with this idea -- exponentially by several orders of magnitude bigger and more complex, complicated by globalization and the people we'd hire to do this are the incredible dickheads and cunts that got us into the mess in the first place. Yeah, I sure as fuck feel better. We're within footsteps of going back to goddamn barter systems or gold or something, and the best, most pragmatic minds in economics come up with the SWEDISH SOLUTION!
Sort of. Except it's not really...this is not chess, RISK or Monopoly. This is not the time for the Graham variation on the Sicilian Defense. It's a time for big ideas...or, I recommend we go buy more bullets to keep the economic zombies from eating your brains...
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