Re: [Pen-l] nationalize the banks, eh?

[fmoseley@xxxxxxxxxxxxx]

Quoting Doug Henwood <dhenwood@xxxxxxxxx>:

> Just posted the text of my talk at yesterday's Left Forum panel,  
> "Nationalize the banks! What would that mean exactly?"
>
> <http://doughenwood.wordpress.com/2009/04/20/nationalize-the-banks/>


A few replies to Doug:

1.  Doug asks:  ?where is the outrage??

I would say that there is lots of public outrage out there ? it is all 
over the press ? outrage against the government bailout of banks.  So 
great is the outrage that it is widely perceived that it would be 
impossible at the present time for Congress to vote more money for bank 
bailouts.

The public seems to want a solution to the banking crisis, without 
having to bail out the banks.  And nationalization, with debt-equity 
swaps, as I and others have described, is the best way to accomplish 
both of these objectives.

It does not seem to me to be a very large step for the public to take ? 
from outrage against the bank bailouts to support for the 
nationalization of banks, as the best and most equitable solution to 
the banking crisis.  It is at least a step that we should be strongly 
advocating, in order to make it more possible.


2.  Doug also states:  ?Nationalizing the banks ? means attacking that 
class relation at its core. It would be insane, at our present level of 
political development, to talk in those terms.?

Yes, the control of finance is the core of capitalist power, but at the 
moment it is also the WEAKEST LINK of capitalist power.  The large 
capitalist banks are technically insolvent, and would be actually 
bankrupt without government aid.  That is why a bailout is necessary ? 
from their point of view.  Something has to be done about the banks ? 
this weak link is about to break.

And if a government bailout of the banks is unacceptable to the public, 
then we will have to look for other ways to make the banks solvent 
again.  Nationalization with swaps is the best and most equitable way 
to do this.

Nationalization with swaps would also lay the foundation for a more 
stable banking system in the future.    If we bailout the banks and 
their bondholders this time, they will take continue to take risks in 
the future, and we will have to bail them out again in the future.  In 
other words, nationalization would solve the ?moral hazard? problem.

Again, it does not seem to me to be that large step for the public to 
take ? from outrage against the bank bailouts to support for the 
nationalization of banks as the best solution to the banking crisis.


3.  I agree with Doug that we need more ORGANIZED outrage ? large 
demonstrations, etc.  A first step toward organized outrage is to try 
to educate the public as best we can, every chance we get, about this 
very feasible and equitable solution to the banking crisis.  Especially 
when the Obama administration goes back to Congress and asks for more 
money to bail out the banks.


Fred


P.S.  The NY Times editorial today comes close to what I am talking about:

"The banks? current executives would be fired, shareholders would be 
wiped out and bondholders would take a haircut. But that is the best 
way to ensure that the banks? finances are quickly and efficiently 
restructured, and the taxpayers? investment is protected."
(http://www.nytimes.com/2009/04/26/opinion/26sun1.html)

The main difference is that the Times is talking about TEMPORARY 
nationalization, and I think a convincing case can be made for 
permanent nationalization.  Another difference might be how big a 
haircut the bondholders would have to take.





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