Dr. Doom on the Banking World….
You know, I have to say that if I had to pick one person in this whole “mess” who I’d like to sit down and have lunch with, it would most likely be Dr. Nouriel Roubini. He’s one of the most fascinating and unbelievably correct economists/analysts in predicting not only what has been happening but what to do about it.
A couple of points about what he says:
- Nationalization will be temporary and will happen soon. I tend to think that his 3 to 6 months is a bit more optimistic than reality. Stock prices say it would happen sooner.
- When the banks get reprivatized, they will look substantially different than they do now. There probably won’t be a Bank of America any more, but there might be a Bank of the Southwest, Bank of the East, Bank of the NorthEast etc.
- That brings up some humorous (or at least I think so) possibilities with the name of the bank that I work for. Would Fifth Third become something else?
Stay tuned and read his entire artticle, it’ws worthwhile.
Nouriel Roubini Says Nationalizing the Banks Is the Market-Friendly Solution – WSJ.com
Mr. Roubini tells me that bank nationalization “is something the partisans would have regarded as anathema a few weeks ago. But when I and others put it in the context of the Swedish approach [of the 1990s] — i.e. you take banks over, you clean them up, and you sell them in rapid order to the private sector — it’s clear that it’s temporary. No one’s in favor of a permanent government takeover of the financial system.”
“So if you took over a big bank, and you split the assets in three or four pieces, maybe you create three or four regional or national banks, and they’re stronger! Nationalization — or ‘temporary receivership,’ if you like, if the N-word is a political liability — is an occasion to undo the sort of consolidation that has created an even bigger systemic problem. And the only way to do it is by essentially taking them over and breaking them up.”
Note – I actually wrote this on Saturday and set it to post on Monday morning.
