Last week, I did a blog entry that said US banks were insolvent and quoting Dr Doom, economics professor Nouriel Roubini, saying that the only answer is to nationalize the US banks.
Now we have the high priest of the financial markets, Alan Greenspan, telling the Financial Times that the the "least bad solution is for the government to take temporary control" of the banks. "It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring. I understand that once in a hundred years this is what you do."
Quite a nerve really coming from an anti-regulatory zealot who was one of the main perpetrators of the problem we have now. When Greenspan took over as chief of the Federal Reserve in 1987, public and private debt stood at $10.3 trillion. When he departed in 2006, it had quadrupled to $43 trillion. While William McChesney Martin Jr, who ran the Fed from 1951 to 1970, famously said the Fed's job was to "take away the punch bowl just as the party gets going'', Greenspan did the exact opposite. He didn't raise interest rates to curb the market's enthusiasm and didn't even seek to impose margin requirements on investors. As a result, you got a stock market bubble that was followed up by an even bigger housing and mortgage credit bubble.
And now, he talks about nationalizing the banks, to clean up the mess he made.
no comment untill now