Crise au USA (document en anglais)

As everyone knows the US economy is in great crisis. So in order to find a solution economist are thinking about nationalizing US Banks like leftist countries did before. If you want an example, maybe Hugo Chavez or Lenin remind you something.

And some Senators said that considering the depth of the credit crisis they wouldn’t rule out nationalizing banks. They think that only the Government has the ability to remove the dead parts of the financial system in order to make it functioning again.

However, Obama who didn’t want to follow the same path of Ronald Reagan which is also called in English “laissez faire”, doesn’t want start a nationalization process, at least not yet. Obama Democratic Party want to give the private sector another chance to clean up himself his own mess.

But nationalization’s proponent are trying to explain that is not the kind of nationalization that is built in the belief that the government would be more efficient in ruling large companies than capitalist as in the Marxist theory. They propose the same kind of nationalization that was made in Sweden in the early 1990’s to clean the banking system.

So it would be just a temporary takeover born out of crisis. Those proponents say “Nobody in their right mind wants the government to be in the banking business any longer than it needs to be”.

How do they want the Banking system to ne nationalized?

They are proposing that the government should declare a bank insolvent, wipe out its existing shareholders, fire its top executives and inject enough money to keep it functioning. The government could then siphon off the worst assets and pulling them with toxic assets from other nationalized bank and resell the banks’ healthy part to private investors.

They just want to break the vicious circle or the self-reinforcing cycle in which banks continue to make bad bets in an effort to dig them out of a whole. As you can understand, some bankers are afraid now to make new investments and some other made Hail Mary investments: it is a last minute attempt to dig out of the black, a kind of miracle, so a huge amount of investment like did Lehman Brothers.

Event if the weight of Historical evidence is in the side of proponents for nationalization with Sweden which emerged from the crisis quickly and Japan which suffered through a decade because they have chosen half measures. Obama’s advisers have also some argument against nationalization.

- USA has more banks than Sweden and would have needed more crisis managers to run them.

- The political system is messier and the bank could be vulnerable to political meddling.

- And it would cost a lot of money.

The government prefers the solutions of lend banks money and let them solve their own problems because it will be much cheaper.

And has the private sector has prove with this crisis, it has its limits; the question in Financial Times’ article is it is too late for such moderation?

That’s why as doubts grow, the Obama administration is reviewing the country’s 20 biggest banks this week in order to judge whether or not they would be able to hold up even the worst

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