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Wednesday, February 18, 2009

Nationalization!

The ugly N word. What a conundrum we find ourselves in where the leader of the free-market world, the United States of America, is faced with the word nationalization on and for it's banking industry.

Well, not surprisingly, it will be the Democrats to do it. Not because they are in power, now. And, not because they are the ones who are more inclined, under any circumstance, to nationalize than the Republican party. But, because it is now with President Obama, which is not surprising, seeing his overall disdain for the free-market as it is.

It's no secret President Obama abhors the free market system. These Wall St. fat-cats, epitomize all that is wrong with equity for poor people and all that keep poor people, perpetually poor.

In this event, President Obama is a man for the people. However, another conversely surprising man of the people, is Allan Greenspan, the former Federal Reserve chairman.

Some have likened Allan Greenspan to that of "high priest" of laisser-faire economics. The keeper of the free markets. Fighter of inflation. The purveyor of all that is free trade. However, for this once revered free-marketeer, to now, not suggest, but, say quite boldly "It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring...", leaves the rest of his disciples more than disillusioned.

But, not to say I'm jumping on the band-wagon with Greenspan and Co. And, not to say that I am not a free-market averse personality in any regard. But, nationalization, is the best option for one reason; nationalization, will set in place the government systems, so that the banking system, in this case, has the tools to regulate itself post crisis.

Only government can do this. The free-market, can't and won't regulate itself against malfeasance and fraud. In fact, they never have and never will. Regardless of what folks say about the decreases in regulation in the market, in fact, it is quite the contrary. Sarbanes Oxley and a host of other anti-trust regulation as well as corporate governance amendments, speaks otherwise.

The issue has and never will be the regulations put in place, but it is the fact that the actors in the free and private market, are just that smart to get around the rules and regulations put in place.

There is no law to prevent that before the fact. Just laws for blatant theft.

But, not to stray from the point any further than I have, nationalization, is the best option to change this system and set up a new set of operating rules, which would give the government and the system, some time, of, meaningful recovery, before private actors find a way around the system again.

Private actors like Bernie Madoff, and, now, Sir Allen Stanford.

In any event, the best case scenario is obvious. In fact, has been obvious for quite some time now. It was the big pink elephant in the room since the Savings and Loan's debacle of the 1980's.

The democrats have the will and the US has the global power to get it done, however. But, does President Barack Obama have the political guts to risk his second term, on a temporary fix?

We will have to wait and see!
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