Fred's suggestions:
Yes, I agree that temporary nationalization with later
denationalization is what mainstream folks have in mind. So I guess
our slogan should be "permanent nationalization with haircuts".
Mainstream folks also do not have in mind the "haircuts" for the
bondholders that I am advocating.
But I think there are very strong ethical and economic arguments for
"permanent nationalization with haircuts", as summarized in my
previous message.
Nationalization without haircuts is an outrageous economic injustice
- a bailout of the super-rich bankers and their super-rich
bondholders with ordinary taxpayers' money. This is
unacceptable. (And also trying very hard to conceal this economic
injustice from the taxpayers; that is the subject for another message.)
Temporary nationalization followed by denationalization, would put
our economy once again at the mercy of an inherently unstable
capitalist financial system. Better to keep nationalized banks that
will take fewer risks in order to avoid debt bubbles that inevitably
burst and cause such misery and hardship as we are witnessing today.
Don't you think these are strong arguments? Permanant
nationalization with haircuts is economically just and provides
greater stability.
Even some mainstream folks are starting to concede these arguments
(e.g. Buiter).
Don't you think we should be making these arguments as much as we
can, in order to try to influence the public discussion, instead of
conceding the public discussion to the mainstream folks?
Thanks again,
Fred
My reply:
Yes!
Absolutely we should be making these arguments. When NYT columnists
like Friedman and Krugman can spell out the contradictions so
clearly, it is time to propose a rational, effective, ethical alternative.
Are PERI, CEPA, CEPR, and Levy Institute developing such work? Fred,
do you have a paper to share? Shall we start with Buiter?
Thanks,
Ann
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