Many people lose sight of the fact that the market will not always be down. If one looks at the last downturn, then one sees that there is light at the end of the tunnel. This is very important, as the valuation of these assets is at the heart of a bank's worth and what the taxpayers will eventually have to pay. At the beginning of the savings and loan crisis, the RTC had thousands of properties that had to be sold, and in the beginning it was almost impossible to sell any of them; but as the market stabilized and prices started to rise, these assets were sold, in some cases at a profit. My point being that one has to take the long view and ask if nationalization will allow us to do that. Will the proposed deficit be as large as expected after everything is sold? Will this stabilize the banking system? No one knows for sure. We need to allow ourselves the time to work out this problem, and nationalization may provide that opportunity.
Feb 24 2009 - 5:01pm