Nationalize the Damn Banks...

...And Get It Over With!

Paul Krugman: The Big Dither - NYTimes (Complete article)

Last month, in his big speech to Congress, President Obama argued for bold steps to fix America’s dysfunctional banks. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern. Why do administration officials keep offering plans that informed commentators [don't] find credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, the ills of all our major financial institutions would [be] cured.

So why has this zombie idea -- “zombies” [being] financial institutions that are effectively bankrupt but are being kept alive by government aid -- taken such a powerful grip?

The answer is that officials still aren’t willing to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable. But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

Let The Sun Shine In......