The nationalization debate has started. The governments in US and UK are pumping rescue funds or bailout money in the financial giants for almost a year now. AIG, Citi, BofA, RBS etc. have been provided with billions of dollars from the taxpayers’ money. Still the mount of capitalism is shy of using the term “nationalization”. Fed Chairman Ben Bernanke and FDIC chief Sheila Bair call this concept a non-sense.
Nationalization, at this stage, is almost necessitated in order to prevent further collapse of the financial institutions. Depository institutions are the life-blood of a nation’s trade and well-being, and cannot be allowed to play roulette with the citizens’ money. Nouriel Roubini, a well-respected economist has been pushing the nationalization idea for several weeks now. Roubini proposes that the government nationalize all the banks that are deemed insolvent as per the Treasury’s ‘stress-test’, and quickly separate the acquired assets into good and bad for easy disposal.
Indira Gandhi’s government nationalized all 14 of India’s largest banks in one fell swoop in 1969. In a second act, the government nationalized the six next largest banks back in 1980. Today, out of the 88 commercial banks in India, 27 (the largest, including State Bank) have the Indian Government as the largest shareholder. To put in perspective, 75% of the country’s banking assets are in the hands of our trusted government. Also to note is that the Reserve Bank of India, the counterpart of the US Fed is completely nationalized, unlike the Fed which is a quasi-autonomous entity with sometimes squeamish objectives.
Free markets only work when they can self-regulate effectively, which is somewhat ironical given that they only exist because of individuals’ greed. Nationalization is a need of the hour. Be rational in taking decisions and making comments.
Nationalization, at this stage, is almost necessitated in order to prevent further collapse of the financial institutions. Depository institutions are the life-blood of a nation’s trade and well-being, and cannot be allowed to play roulette with the citizens’ money. Nouriel Roubini, a well-respected economist has been pushing the nationalization idea for several weeks now. Roubini proposes that the government nationalize all the banks that are deemed insolvent as per the Treasury’s ‘stress-test’, and quickly separate the acquired assets into good and bad for easy disposal.
Indira Gandhi’s government nationalized all 14 of India’s largest banks in one fell swoop in 1969. In a second act, the government nationalized the six next largest banks back in 1980. Today, out of the 88 commercial banks in India, 27 (the largest, including State Bank) have the Indian Government as the largest shareholder. To put in perspective, 75% of the country’s banking assets are in the hands of our trusted government. Also to note is that the Reserve Bank of India, the counterpart of the US Fed is completely nationalized, unlike the Fed which is a quasi-autonomous entity with sometimes squeamish objectives.
Free markets only work when they can self-regulate effectively, which is somewhat ironical given that they only exist because of individuals’ greed. Nationalization is a need of the hour. Be rational in taking decisions and making comments.
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