Posted by
Andrews on Wednesday, January 21, 2009 7:01:31 PM
Has anyone else heard all the nationalization rumors circulating about Citigroup and Bank of America? From what I can gather, the entire thing started with a number of financial blogs (mainly
Felix Salmon, who is getting the most ink, but also
Brad DeLong,
Justin Fox, and
Steve Randy) speculating about the "need" to nationalize these institutions. However, beyond the opinions of a number of financial writers, I can see no real substantial reason to believe there is anything to the rumors.
What troubles me is the ease with which the public has accepted these rumors. If the public is so calm about the possibility of nationalizing financial institution, how long will it be before the government decides to give it a try. After all, unlike the past where the last memory of nationalization was Amtrak fiasco, now we have the supposedly "successful" semi-nationalization of AIG as a model, allowing the government to
pretend that nationalization is a good idea [warning DailyKos link!!!].
Then again, in this specific case, I am quite skeptical, as it appears that the panic is largely due to the attention paid to several prominent financial writers and the public misinterpretation of their opinions as predictions. But I worry that sooner or later such rumors will not be just hot air and the Democrats will get the urge to flex their political muscles and try to reenact the glory days of FDR.
Note: While the DailyKos link above actually opposes the nationalization of AIG, note that their opposition is mainly because the government won't nationalize their favorite targets first. Thus, it does support my argument, even if the poster is opposed to the AIG nationalization.
POSTSCRIPT
As the current administration appears to be enamored of former Clinton appointees, and
Rober Reich has been writing about the need to impose onerous requirements on bailout recipients, to the point of driving them into bankruptcy, I doubt Obama has any immediate plans to nationalize any financial institutions. But that does not mean congress is similarly reluctant. I suppose time will tell.