On Friday I said I support President Obama's so-called stimulus plan. I don't, however, think the word stimulus is accurate. The system needs more than a stimulus: it is in need of fundamental shifts in the way it operates. Maybe I'll start calling it Obama's Structural Adjustment Plan (SAP). Anyway, what I think about TARP (the Wall-Street bailout) is this:
--The TARP money should not be spent bailing out banks that failed in such destructive, overarching fashions. The bankers aren't criminals or anything, and they can even keep the money they've gamed up to this point. But absolutely, no doubt, the banks should be allowed to fail. The system should be allowed to shift and adapt. The banks are a bad, and they have proven themselves such.
--As a result, full nationalization will continue to be a possible alternative of action. It is possible it will emerge as the only alternative. The banks have failed spectacularly and there is only a finite amount of political will to keep 'bailing them out.' If the banks don't turn themselves around soon, how much longer do they have? Furthermore, there is little confidence in the banks and in the consumer, and the environment necessary for stable liquidity and credible exchanges might be impossible with the same old bailed-out banks and over-bought homeowners.
-- So what should we do? We've been back-stopping the banks de facto since September anyway. So we might as well call it like it is: full nationalization, with the idea that a privatization will occur in the future, but with no set time-table. Also sensible, to me, would be to spend money re-writing the terms of the nation's housing debts. Re-investing in our middle class; in pure economic terms, creating again a stable basis of consumption and credit-worthiness.