Replies

Roubini Tells Geithner To Nationalise US Banks

Tim Geithner must nationalise some of America's biggest banks and take the total toll of the US bail-out to around $2 trillion, according to one of the world's most prominent economists.

By James Quinn Wall Street Correspondent
Last Updated: 1:12AM GMT 16 Feb 2009

Nouriel Roubini – the man feted with having foreseen the financial crisis before almost any of his peers – has warned that the US Treasury Secretary must go significantly further than his detail-light bail-out plan delivered last week, and argues that the Obama administration should move swiftly to take public ownership of those major US banks which are failing.

Professor Roubini, who worked with Mr Geithner in the Clinton administration, told The Daily Telegraph: "Many US banks are insolvent, even the major ones." While nationalisation is "a politically- charged decision" which needs to handled carefully, he said it needs to take place "sooner rather than later" for the sake of the wider economy.

Professor Roubini calculated that, on top of the existing $700bn (£491bn) of American taxpayers' money allocated to solving the banking crisis, Mr Geithner may need to ask the US Congress for between $1,000bn and $1,250bn in extra funds. "Sooner rather than later, they'll need more money," he added.

[snip]

Nouriel Roubini is a genius. Think of it this way. Banks levered up to 40 to 1. Imagine a game of musical chairs where there are 40 people and only one chair. As long as the music is playing... nobody cares. But when the music stops, the 39 beat the crap out of the poor fool with the chair! Welcome to leveraged fractional banking. There is only 1 dollar for every $40 in debt. Better buy gold (but, can;t tomorrow... we need to celebrate presidents while the REST OF THE WORLD buys gold tomorrow.

Poop!

“...argues that the Obama administration should move swiftly to take public ownership of those major US banks which are failing.”

The moment any of the big banks are nationalized, people and institutions will move their money to these banks and there will be a MASSIVE run on every non-nationalized bank.
Think about it ... would you want your money in a non-gov’t backed bank? And the FDIC is bankrupt, so don't think they will reimburse you for your lost bank accounts.