Ok, I get the argument that, on purely theoretical grounds, 'nationalization' is a dirty thing that should be avoided at all costs.
But even at costs like the ones we are seeing? At some point, doesn't the reality of consequences overwhelm the socialized logic of the sacred free-market?
When I say the costs we are seeing, I mean examples like this: The US government has back-stopped over $150 billion of AIG's debt. I checked today. AIG's market cap is barely $3 billion. This means the government is backing AIG at 50 times its value. Is this fully-dependent-but-still-private relationship preferable to full nationalization?
For that's a lot of debt we are assuming, and will have to pay back. How about if a little control comes with that full financing?
Right now, the AIG numbers tell us, the government is running the show on Wall Street. At the moment, we do not have a privatized banking system. Anyone who thinks this is a bad thing, should stop trying to 'preserve' a privatized banking system and start trying to 'recreate' a privatized banking system. What kinds of new institutions and institutional practices will be needed in this re-creation? This is a question we should be asking. For nationalization may not be the truth we want to tell ourselves, but it is the reality of the moment before us.
It strikes me as reasonable that, because of this de facto government ownership, a far more complete national discussion about the practices of these banks should be going on. Right now we have a hybrid approach: complete government financing, with little public oversight. This is generally accepted as the way to run neither a democracy nor capitalism. We have the worst of both worlds. In capitalism, bad firms are supposed to go under. Not in our case, and I generally agree. In democracy, the public is supposed to ask questions thus letting better information and better overall understanding emerge. Questions, such as: Why do the executives still get crazy bonuses? Why do they even have their jobs still? What are the banks doing with their capital injections? We lack this second part, and our plans are suffering as a result.
To me, as a result, this whole crisis is beginning to look like a mess. We should immediately move to create a better decision-making process than the one the country has so far used. We can start by giving more data to the public so the public can better understand the elite's actions. I want to know this: Where is the TARP money?
As a society, we can't control the outcomes of the plans we put in process, or the problems that will emerge. But we can control the methods we use and the reasons we come up with to generate the plans and respond to the problems.