Nationalize the Banks? Stiglitz says, "Yes"
It’s always nice to hear a Nobel prize winner pump for nationalizing the banks, something I have inelegantly cawed for. We have tried pouring the money into them–with not much for a result…even talked about just assuming the bad debt. Anyway, here is Joe Stiglitz:
The fact of the matter is, the banks are in very bad shape. The U.S. government has poured in hundreds of billions of dollars to very little effect. It is very clear that the banks have failed. American citizens have become majority owners in a very large number of the major banks. But they have no control. Any system where there is a separation of ownership and control is a recipe for disaster.
Nationalization is the only answer. These banks are effectively bankrupt
I might go one step further: Create a national bank–let the present ones sink or swim. They created the debt; let them flounder in it. That may be harsh.
To help them, I might allow them legally to bury the Credit Default Swap monster in the Marianna Trench…at maybe half a penny on the dollar. I certainly would not want the government to assume the kind of debt CDS represents.
I certainly would not buy them then sell them back once they are fixed.