"Stock injection" instead of bailout
Everybody's freaking out about this NYTimes story that the Treasury is about to effectively buy shares/nationalize the banks, but, to me, this actually seems like a better deal.
From the little I've read about all this, there seemed to be alot of economists preferring this idea to the "buying toxic mortgages" bailout plan. (And this was written into the law as an option.)
I think it's the "nationalization" language that's freaking everyone out. Hopefully the markets respond well tomorrow.
From the little I've read about all this, there seemed to be alot of economists preferring this idea to the "buying toxic mortgages" bailout plan. (And this was written into the law as an option.)
I think it's the "nationalization" language that's freaking everyone out. Hopefully the markets respond well tomorrow.
posted by mikevotes at
9:19 PM
12 Comments:
Sounds OK. They could even sell the stock on the open market if/when things turn around. Socialism American style.
By
Anonymous, at 10:43 PM
Right, so, in theory, the slowly sell the stock off in five years for a profit.
But from the company side, partial gov't ownership would basically act as a guarantee that these companies are backed and aren't going bankrupt, so people could lend to them, reopening the credit flow.
I think it's a better deal (but it probably couldn't have passed if this were the headline of the bill.)
By
mikevotes, at 7:15 AM
Sounds like a much better idea than just buying up bad debt outright. The current plan seems to treat the American taxpayer as a doormat for perpetrators of Wall Street robber barons.
I'd modify Anon's description and call this newer idea, Social Capitalism. Not sure it sounds better than 'nationalization' though...
By
-epm, at 7:30 AM
I don't think you can use the word 'social'. New Capitalism?
By
Anonymous, at 8:11 AM
That's why I like "stock purchase" or "stock injection" or "gov't backed recapitalization."
It takes all that ugly language out.
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mikevotes, at 8:18 AM
Right. Get a good name and it could fly. I think it's worth a try. At the very least it would be competition for the 'private' banks.
By
Anonymous, at 8:38 AM
And, I gotta admit that this level of economics is out of my expertise, but, again, I've seen many economists for this kinda plan, and none against except in ideological terms about gov't intervention.
By
mikevotes, at 8:43 AM
Politicians have been using the term "equity stake," which seems as good as any. The implication is that we're not bailing out, but buying in.... taking charge as it were.
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-epm, at 9:06 AM
The way I'm understanding it, in my brainless way, is that much in the way the police, fire department, public library are run for the benefit of everyone equally, without any particular eye toward making a profit, the banking system seems to be drifting this way too.
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Anonymous, at 9:54 AM
"Equity stake" seems like a great selling phrase.
....
Anon, so far, and again I'm not an expert, the requirements and restrictions laid on the institutions hasn't really been spelled out, but you gotta figure that if the government is a shareholder, certain political requirements would be expected.
I don't think profitless is a likely goal, but I would expect more forced equity in polices, and, likely a greater social conscience in their actions.
By
mikevotes, at 10:57 AM
I guess it all comes down to who's in charge. Even if banks become effectively state owned someone still has to make investment decisions.
By
Anonymous, at 10:57 AM
Yeah. Because the gov't position will likely be run by ex Wall Street folks.
By
mikevotes, at 2:03 PM
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