Temporary nationalization

With all the talk of nationalizing some of the failing banks coming from both Republicans and respected economists (as well as the no longer so respected Alan Greenspan), maybe the word will lose its toxic flavor, or maybe they'll come up with a new word.

Here's what Nobel Prize winning economist and New York Times columnist Paul Krugman says:

Still, isn’t nationalization un-American?

No, it’s as American as apple pie.Lately the Federal Deposit Insurance Corporation has been seizing banks it deems insolvent at the rate of about two a week. When the F.D.I.C. seizes a bank, it takes over the bank’s bad assets, pays off some of its debt, and resells the cleaned-up institution to private investors. And that’s exactly what advocates of temporary nationalization want to see happen, not just to the small banks the F.D.I.C. has been seizing, but to major banks that are similarly insolvent.
. . .

And once again, long-term government ownership isn’t the goal: like the small banks seized by the F.D.I.C. every week, major banks would be returned to private control as soon as possible. The finance blog Calculated Risk suggests that instead of calling the process nationalization, we should call it “preprivatization.”

The Obama administration, says Robert Gibbs, the White House spokesman, believes “that a privately held banking system is the correct way to go.” So do we all. But what we have now isn’t private enterprise, it’s lemon socialism: banks get the upside but taxpayers bear the risks. And it’s perpetuating zombie banks, blocking economic recovery.

What we want is a system in which banks own the downs as well as the ups. And the road to that system runs through nationalization.

It's beginning to seem the only logical thing to do at this point. It seems that the Obama administration is resisting this move, but it's not clear whether they oppose the actual process or are afraid of the political implications of being tarnished by opponents for "socialism."

Obama needs to step above political worries on this and do the right thing, like he has done on many other matters. So far, he's still winning the battles. Let's get on with this one.

Ralph