One more from the Stock Jockey, a call for leniency, for Greenspan, yes, for some others, no such luck. – Ilene
Greenspan and Roubini Call for Selective Bank Nationalization
Courtesy of Stock Jockey at 1440 Wall St.
If you are a long only manager you have only had to do one thing to beat your benchmark and maybe even your peers – underweight financials.
There is not much more blood to get out of this turnip, however. Apparently if the remaining financials in the Dow were to go to zero the index would only fall another 400 points, give or take.
It is a slightly different ballgame in the S&P but you get the idea – ignoring these stocks is a little long in the tooth. Just make sure you don’t own the one that is going to be seized…something Alan Greenspan is now advocating, apparently:
"The US government may have to nationalise some banks on a temporary basis to fix the financial system and restore the flow of credit, Alan Greenspan, the former Federal Reserve chairman has told the Financial Times.
In an interview with the FT Mr Greenspan, who for decades was regarded as the high priest of laissez-faire capitalism, said nationalisation could be the least bad option left for policymakers.
”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.’” FT
In addition, Nouriel Roubini is rattling cages again, this time in and Op-Ed piece co-authored with Matthew Richardson in the Wall Street Journal. But how far into the capital structure do they want to go, exactly?
"Since Mr. Geithner’s plan has been unveiled, the stock prices of the financial sector are off about 19%. This is not necessarily a bad thing. The banks were expecting another handout.
While it was not his intention, the reality is that Mr. Geithner is going to confirm the insolvency of the financial system. Once we face this truth, there really isn’t much left to do but nationalize.
We are not talking about the government operating the banks for the long-term. But, as was done in Scandinavia in the early 1990s, we are talking about orderly clean up, then reselling the banks to private investors.
The good news is that much of the risk will be borne by the banks’ common and preferred shareholders and their long-term unsecured creditors—as opposed to by taxpayers. This makes sense since shareholders and creditors were the ones who bet on banks in the first place. We’ll also stop repeating the mistakes we made with Fannie and Freddie." WSJ
Roubini and Greenspan stop short of recommending the public execution of bank employees, which is what I would like to do with a few guys from AIG Financial Products.
With Guantanamo closing it is probably easier to euthanize a SellSide executives, especially if they plan to compete for two or three jobs open on the BuySide.
While I will spare Greenspan the death sentence, I would ask him to do me a favor.
Shut your piehole!
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Greenspan backs bank nationalisation
FT
There’s Virtue In Geithner’s Vague Bank Plan
WSJ
Recession will be worst since 1930s, Greenspan says
Reuters
