1

If it quacks like a duck...

At this economic bloggers conference I'm attending, we had a discussion last night about how no one in charge will say the word "nationalization." It's obviously a politically potent word. But then I wake up this morning to read about Citigroup. As Dan Grech's Morning Report story points out, this is nationalization, plain and simple:

Finance professor Peter Hahn: The government is not just taking an equity stake at 40 percent. Citi's deposits are guaranteed, the hand of the government really is all over the institution. The real risk is being born by the taxpayer.

Then, the people running the government should respect the taxpayer. Stop playing semantics. Be straight with us.

Log in to post1 Comment

Thanks for that sentiment. Though maybe a duck is not be the most apt metaphor for what has been occurring here. Perhaps monkey? Or even donkey?

Personally, I fear that what's happening hear is so much worse even a nationalization. Instead, the government is investing in return for inflated shares (or preferred shares). I heard Stiglitz yesterday on Pacifica Radio go through the crummy deals reached so far with the banks for now worthless shares. Presumably, this is based on either outright deception by the banks -- all real estate is unique you know! -- or some bogus belief in where the direction of real estate is heading. In Southern California, I hear that we are at 2003 levels, while the stock market indices are at 1997 levels: go figure. Stiglitz's calculation was that the government is steering the worst possible course by throwing good money after bad essentially ensuring that we taxpayers will fork over the largest pound of flesh possible. Perhaps something on the order of 25% of our GDP to get out of this mess.

UGGGGGGHHHH!!!

With Generous Support From...