[OPE] State bank?

Marvin Gandall, referring to Buiter's view, queries:

Why bother taking over the big private banks like
Citicorp and B of A or, even worse - as the administration proposes - to try
to breathe new life into the zombies by taking their worthless assets off
their hands and parking them in a "bad bank" at a huge cost to the public?
If the banks are nationalized, the shareholders and creditors will almost
certainly get the state to overvalue the assets and overcompensate them. I'm
sure you will not like their definition of "just compensation".

Better to just let the banks sit on their garbage until they are forced to
file for bankruptcy, and have a new massively capitalized state bank lend
directly to those in need, no? It may be the least likely outcome, but as
the state bank idea is already being floated in elite circles, it does
provide an opening to promote it more widely.
http://archives.econ.utah.edu/archives/pen-l/2009w06/msg00174.htm

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Received on Sat Feb 14 04:40:22 2009