Fred wrote: > Good question. Yes, the Treasury is "buying" preferred > shares. Perhaps "giving" was too strong a verb. But the > T is accepting a lower rate of return and no control over > the banks.
How low is low? Treasury is paying next to nothing now. And preferred stock is almost like debt, guaranteed dividends, with the warrants upside -- it becomes common stock if the price goes up. What if the banks collapse? Well, there's self-reference here. It's like the monopoly model: there's no supply curve. Because, it is up to the government whether these banks get liquidated or not. So, it's not clear to me that the bankers are getting any handout. I think our argument has to be, not that bankers are getting a freebie, but rather that the public payoff of TARP is pretty dubious *if* banks don't actually use the money raised to open the credit spigot. IMHO, that's the argument in favor of nationalization. That the public buck is not getting a proper public bang. You need to control the banks (some of them, at least, and all if you don't want the other banks to pocket the external benefits) to make them lend as much as required. As for "permanent" versus "temporary," I say whatever. Cross the bridge when you get to it. For now, get the banks nationalized. Later on, decide on the next step. Take Obama's word for it: If it works, keep it. If it doesn't, discard it. Which leads to the substantive argument, the "battle of ideas," the "fight for the minds and hearts" of working people, because the issue translates as: Is nationalized banking working *for you* the workers? _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
