Paul Krugman is right on bank nationalization and the Austrians don't get it

[MKTrader]

Krugman isn't fit to run a child's lemonade stand.

No wonder he's such a "respected" academic economist.

Quote from Daal:

You want banks to fail?Government restructuring is failure. Heres the thing that guys like Jim Rogers dont get it, there is no such thing as a bank bankruptcy! So what kind of failure are you looking for?

The FDIC takes banks over when they are illiquid, inadaquetly run, undercapilized. then they reestructure, clean it up, give some deposits to other banks, sell the clean up bank,etc
This is not called nationalization but its essentially that. If the FDIC took C over and reestructured, then C failed, the austrians had their way, how come they are not happy with this?

But of couse, free market fundamentalists seem to want bankruptcy judges with NO experience with bank failures to do the job just so they have satisfy their inate desires to make their free market heros to be proven right. They also have a view that nationalization=socialism=bad even though this has nothing to do with government running banks

Last time I checked the bankruptcy system was run by government employees the same way the FDIC is

 

[Daal]

Quote from trader3cnd:

No he isn't and he doesn't even believe it himself most probably but his boss told him to say so.

So what is the solution?As I explained in a language that even a child can understand the NATIONALIZED US bankruptcy system doesnt handle banks. Allowing C to go into FDIC's(temporary nationalization) hand for reestructuring and clean up is the equivalent to bankruptcy, what you government bashers want to happen here

 

[trader3cnd]

Quote from Daal:

So what is the solution?As I explained in a language that even a child can understand the NATIONALIZED US bankruptcy system doesnt handle banks. Allowing C to go into FDIC's hand for reestructuring and clean up is the equivalent to bankruptcy, what you government bashers want to happen here

-Flat sales tax

-No federal tax

-No capital gains tax

-No corporate tax

and US of A will become again a financial and industrial superpower in a few years.

 

[fearless9]

Quote from achilles28:



Personal Accountability.

There is an expression that I have not heard in a long time.
Welcome back.

regards
f9

 

[Landis82]

Quote from Daal:

So what is the solution?As I explained in a language that even a child can understand the NATIONALIZED US bankruptcy system doesnt handle banks. Allowing C to go into FDIC's(temporary nationalization) hand for reestructuring and clean up is the equivalent to bankruptcy, what you government bashers want to happen here

Daal, after this weekend I am convinced that there are an awful lot of people here on ET these days that should just be put on IGNORE.

Believe it or not, I had a guy named Cutten and another guy named Smilingcynic make the case that Family Trusts/Estates should not be allowed to "escape" paying taxes because the family members were simply "lucky" to inherit the money from their parents, and never did any hard work to merit such inheritance.

In otherwords, they had ZERO problem with the government subjecting you to "double-taxation".

It was truly a new low, even by ET standards.
Here is the thread:

http://www.elitetrader.com/vb/showt...4682&perpage=6&highlight=estate&pagenumber=11

Feel free to read the next 3 pages of it and let me know what you think.

Unfreaking-believable!

 

[Landis82]

Quote from achilles28:

Thats what made America Great. Remember??

Personal Accountability.

This bailout just rewards catastrophic risk-taking and speculative excess.

The cows have long been out of the barn, my friend.

Personal Acccountability you say?

An interesting concept, but I believe that it is based on the assumption that laissez-faire Capitalism "self-regulates" and that there are not any "distortions" in the marketplace.

And as we all know, that is terribly FALSE.

 

[Debaser82]

Quote from achilles28:



Government could have nationalized the toxic paper for around 2 Trillion. Problem solved.

I have read sources claim BAC and C have +6trillion in toxic CDS exposure by themselves.

Add a couple of trillion from the rest to that and perhaps the problem is 1) much larger then even perceived by the biggest bears and 2) truly unfixable.

Don't know where this puts us as a world but we are in for some interesting times to say the least.

 

[makloda]

According to the free market nughuggers there is ZERO difference between something like WebVan or Worldcom going bust and Lehman, AIG and BAC + a bunch of emerging markets going into unmoderated bankruptcy.

Even in the aftermath of Lehman they still hang on to their "self-cleasing market" thesis. Shouldn't most traders understand that markets tend to swing back and forth between being efficient and non-efficient?

 

[Cdntrader]

Quote from Daal:

You want banks to fail?Government restructuring is failure. Heres the thing that guys like Jim Rogers dont get it, there is no such thing as a bank bankruptcy! So what kind of failure are you looking for?

The FDIC takes banks over when they are illiquid, inadaquetly run, undercapilized. then they reestructure, clean it up, give some deposits to other banks, sell the clean up bank,etc
This is not called nationalization but its essentially that. If the FDIC took C over and reestructured, then C failed, the austrians had their way, how come they are not happy with this?

But of couse, free market fundamentalists seem to want bankruptcy judges with NO experience with bank failures to do the job just so they have satisfy their inate desires to make their free market heros to be proven right. They also have a view that nationalization=socialism=bad even though this has nothing to do with government running banks

Last time I checked the bankruptcy system was run by government employees the same way the FDIC is

the gov't is bailing out bank pref/bond holders @ taxpayers expense. That is the issue.

 

[Daal]

Quote from Cdntrader:

the gov't is bailing out bank pref/bond holders @ taxpayers expense. That is the issue.

True, in the current form(government comes in at the same level as pref) they are getting an windfall. On the FDIC scenario they only get something if there is a systemic issue otherwise they get the WM scenario of getting wacked
I'm arguing for nationalization but I could get hurt if C bonds dont have a systemic issue, so I have an incentive to continue the current bailouts because they hurt equity a bit and help bonds