Wednesday, February 18, 2009

Welcome back from the reeducation camps Comrade Greenspan!

In a fairly stunning revelation, Greenspan backs nationalization:
”It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.”

Is this a sign of a change in conventional wisdom from conservative economic circles? Lindsey Graham is quoted in the piece as (somewhat tepidly) supporting nationalization... and there was this dude from AEI(!) who supported it as well:
“I think they know how big it is, but they don’t want to say how big it is. It’s so big they can’t acknowledge it,” said John H. Makin, an economist at the American Enterprise Institute, referring to administration officials. “The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks.”

Instead, the Japanese first tried many of the same remedies that the Bush administration tried and the Obama administration is trying — ultra-low interest rates, fiscal stimulus and ineffective cash infusions, among other things. The Japanese even tried to tap private capital to buy some of the bad assets from banks, as Mr. Geithner proposed.

I leave the analysis of these kind of things to people who actually know something about economics, but the shift is pretty interesting... previously it was only left of center economists who supported the "Swedish model", as they say. Now it seems to be picking up steam on the right as well... is this the cover Geither and Obama need?