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February 26, 2009



Hm. Well. If Alan Greenspan and Lindsay Graham say it's time, I'd check my watch.

There are advantages to nationalization. I especially like the parts about wiping out existing shareholders and firing management.

However, there are disadvantages. Operations like Citi are heeeuge. And if you nationalize, you have to actually pay attention to what they're doing. It can turn into an enormous time sink. There are also no guarantees that it will actually be better for the taxpayer. In the S&L crisis, they appointed people who did a fire sale of assets; people made money, but it sure wasn't the taxpayers. A fire sale of assets at this moment would be particularly bad.

As HL Mencken said, "For every complex problem, there is an answer that is clear, simple--and wrong." In the case of the financial crisis, there may even be more than one.

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