Individual investors and investment institutions (Mutual Funds, IRA funds, Pension funds, etc) will SELL EVERYTHING.

It will take years if not decades for investment confidence to return so that businesses can have enough capital to operate.

Businesses will have no capital to operate except borrowed bank money.

Unemployment will soar to levels never imagined.

Many are now experiencing the real effects of letting Lehman Brothers fail.

If Obama nationalizes the banks, I hope you have a bullet proof job.

don't think so.



We haven't been operating on any capital for years already. We have been operating on pure debt. Where have you been?



Yes, but not for this reason.



So, bailing out is not a "nationalization" then?




They have already been Nationalized. What is left is simply a label.

You all give Obama waaaaaaaaaaay too much power. He, alone, cannot nationalize the banks. That is something that would have to go through Congress, yes YOUR representatives, and most likely the Supreme Court. If you don't want this, get involved, start protesting to your REPRESENTATIVES now, get a grassroots opposition going. The only way YOUR government will know the people would be opposed to this is open your mouth and take some action. *****ing, moaning, complaining and fearmongering on a dating/social website is going to do nothing to accomplish your goal.

Although national banks have federal ties and guidelines, banks are owned by people who invest and it is their business. I would guess that should the federal government interfere past a certain point, those investors would sooner close shop.

That is happening now and if the banks are nationalized investor confidence will be destroyed. Individual investors and Institutional investors will start selling everything that even has a remote chance of being nationalized. Automakers, airlines, etc. The common stockholders have in many instances already sold. Soon the preferred stockholders and note holders will cut and run too.

Where have you been? Investors have been pulling capital already so most businesses have less capital on their balance sheets. If the banks are nationalized there goes the rest of the capital they need. It will start a chain reaction that will spread across every business sector as investors just put their money into savings accounts and government bonds.

Jobs are running out the window daily because businesses don't have enough investor capital to create profits and pay people to work.

Thgis is why I am in a credit union.

Question? Why didn't these Investors pull their money out when they found out how lavishly their money has been squandered by those who have been managing it? And, why would the banks take the bailout money and then fight being nationalized?

You need know only three principles to know why we are where we are and how we got there:

1) Trees never grow into heaven.

2) It's only when the tide goes that you find out who's been swimming naked.

3) When the cops raid the game, they take ALL the players to jail.

For years, cheap money tried to make a tree that would grow without end, but as with everything else, there is a practical limit to how high a house of cards can be built before it collapses under its own weight. Most everyone from governments to individuals were on a treadmill of consumption at ever higher prices with fewer resources. (Principle 1)

There finally came a point where even incredibly cheap interest rates couldn't make up for the lack of resources (read:income) and the smart money knew this, and quit lending to the dumb money. But in many cases, the dumb money was able to keep "swimming naked" because of the tide of equally dumb money supplying it with cover. (Read: credit card debt at 33% interest and subprime mortgages). Things finally reached a tipping point, and the tide when out in a rush, as tides are wont to do. (Principle 2).


Now, bereft of real earnings potential because of lack of confidence bourne out by a lack of earnings, everyone is going to pay the price (Principle 3) of overcoming the inertia of getting the bad debt off the books. Someone is going to get caught holding the bag, and that someone is you and me in the form of high government spending that will eventually have to be repaid and in loss of jobs and opportunity to make money because the economy tanked.

Don't forget to thank the people who forgot the 3 principles stated above for this mess. Hint: it wasn't Obama.

Which, if you think about it, buttresses up another old investment saw: "A bull can make money, a bear can make money, but a pig never can."


-Kerry O.

Not to say that what's going on is a good thing, but there is no such thing as "not enough money" in a fiat system.

Whats going on is a simple crisis of confidence in fiat. Government correctly responds to it by implying that there is a recession. People are scared off, and approve printing of new and additional fiat. As soon as inflation leaks out into the market, we're rolling again.

So, then, what had changed? Nothing, except the people with savings had paid to ease the debt burden of those with debts. The inflation, the process by which this payment is made, affects not only Americans. Everyone in the entire world, including Osama Bin Laden, who hold USD, will pay. Everyone who holds debt in USD, will be paid. I'd call it "Socialism 101".

because to them, it's free money to a privatized entity.

a corporation is separate from it's shareholders and therefore, the board has no real liability to the company other than the stock they hold. if it were a proprietorship or partnership like many businesses, the owner is still liable for any debt even after the company collapses.

you see, since there is no liability, they will do whatever they can to stay up in their cushy jobs because anything is better than the collapse they were supposedly headed to. even if they take the loan and still go down, they still have no liability to the loan and are no worse off than when they started. free money.

the stupid thing is the government wasn't even smart enough to negotiate controlling share so even if they want to change something, the other shareholders can still overpower them.

Awww, the "American" way! Take what you can and to hell with the rest. Sad that many of us have come to see that as a good thing.

The OP was intended to be about what would happen if the Obama administration completely nationalized big banks such as Citigroup or Bank America.

I agree that the cheap interest rate policies of Alan Greenspan and crew caused much of the problem. Bush and Congress too.

But, if another big bank fails or is nationalized investor confidence will be destroyed for many years thus leading to the loss of an unbelievable amount of jobs. Look what Lehman's failure has brought about.

The best solution for the long run is for the government to start buying from the banks HOMES that are in foreclosure and on a one by one basis trying to negotiate to keep people in these homes if possible. Yes there are many decisions to be made as for the rules and values but its the best way out. At least the government would have some value in the tarp money (the home). If Paulson had stuck to such a plan we'd be ahead of the game.

But, what would the plan do for someone like me who didn't get a sub-prime mortgage and has paid her bills, but now finds the dollar stretching less and less. I see many of those sub-prime folks with Lexus' and Hummers, big screen TVs, and other luxuries. I don't have any of that ands I can pay my mortgage. Why should my tax dollar help them? Will the help suddenly teach everyone the ere of their ways? What's to stop these folks from taking a deal to keep their homes and then taking a vacation to the Bahamas?
There is nothing "right" about any of this!

That was a Bush/Paulson move...

Righting a sinking ship sometimes is not fair but in the long run better for everybody. Be proud of the fact that you are not one contributing to the problem. I don't have any children but I'm proud some of my tax dollars help education. Only hard times and the loss of luxury teach some people the error of their ways. Many of the people with those things have already lost their homes. Of course, there will be some that will take advantage of such a program but eventually that will catch up to them.

Many preventable foreclosures can be avoided. Paulson had it right - the government needs to buy up these HOME mortgages facing foreclosure and keep people in their homes. The banks get them off the books. Finally, I read that this is happening : the feds are moving to do just that with AIG and Bear Sterns. Hopefully, a similar solution will involve Citigroup and Bank Of America home mortgages too.

http://news.yahoo.com/s/ap/20090128/ap_on_bi_ge/fed_foreclosure_relief

You will pay "to keep the people in their homes and hummers". You have lost, because you did not realize that this economy is made for whoever steals the most. Creditors are punished, debtors are rewarded. You see, now the govt "needs" to buy the homes (by debasing your dollars, destroying your retirement funds), meaning, again, you pay, because it is your dollars that will get cheaper, and your equity that won't mean anything like you put into it.

Its all those over paid union bank tellers killing the banking industry, look what they did to our country.............

It's coming out late today that the Obama team may go to a plan similar to the original Paulson plan. A "bad bank" will hold the questionable mortgages. Foreclosure in many of these
mortgages may be preventable with loan adjustments of some kind. At least the government will have an asset(home) rather than just giving the money to the banks.