[Pen-l] Nationalization of banks with haircuts

[Julio Huato <juliohuato@xxxxxxxxx>]

Shane Mage wrote:

> And what, pray tell, would be the *social* cost of
> declaring bailout-worthy banks bankrupt and continuing
> their operations with the Treasury managing them as
> receiver-in-bankruptcy?

Please read what Fred, raghu, and I have been discussing.  The three
of us assume that the goal is not to prop up the bankers, but the
banks or -- more precisely -- the activity of banking (credit).  It's
not the same thing.
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