News for February 23

Whither Bank Nationalization?

The New York Times, Washington Post and Wall Street Journal all prominently featured articles on bankers’ worries about nationalization on their front pages this weekend. The coverage prompted a rain of discussion from economists, bloggers and pundits on the issue. Although the Obama administration has said that there are no plans to nationalize banks in the near future, some commentators are saying that the move may come sooner rather than later. Links include:

ThinkProgress |  “But if not nationalization, then what? Geithner’s public-private investment fund may get toxic assets off the banks’ books, but nationalization is a more straightforward process, and doesn’t depend on Wall St. being willing to buy the junk currently clogging up the banks. And the longer nationalization is delayed, the longer the solvency of the entire banking system will be in question. Thus, more good banks will get dragged down into the mud with the bad.”

XPostFactoid |  “Many among the chorus of voices across the political spectrum now urging bank nationalization make it sound quick, clean and simple. The watchwords are “bite the bullet,” “cut the Gordian knot”; the implication is usually that Obama and Geithner are wasting precious time and money and heightening market uncertainty by by dallying, trimming, refusing the grasp the nettle. So it’s striking that one of the highest profile advocates of nationalization, Nouriel Roubini, whose words today are freighted with the current gold standard of credibility, having forecast the market meltdown, argues yes, that selected behemoth banks must be nationalized — but also that the time is not yet ripe.”

Matthew Yglesias@Think Progress |  “Under the circumstances, the thing to do is to be strategic about the order in which you do the “stress tests.” You want to first examine the banks that are in the best shape. Then the government can find that they’re solvent, probably offer some form of guarantee, pat everyone on the head, and create a situation where those banks have an easier time raising private capital. Only after you’ve done that do you go to the banks that people think are insolvent and, if that turns out to be right, you do the nationalization there. There’s reason to think that the markets are already pricing a chance of nationalization into the values of Citi’s trust preferred securities. So it’s not exactly a secret which banks are the most troubled, and which the least.”

How the World Works @Salon |  “That doesn’t necessarily mean Obama, Larry Summers, and Tim Geithner are pawns of Wall Street. It could just be that they made a strategic decision to speak softly before making an intervention, rather than signaling their intentions and risking an even higher level of chaos. It’s OK for Alan Greenspan to start talking positively about nationalization; each and every utterance by the Maestro no longer moves the markets like an electric shock. But if Bernanke or Geithner or Obama say the word, people will jump.”

Brookings Institution |  “The most fundamental question about the public/private partnership is the proper financial role of the taxpayer. In practice, the government is highly likely to provide cheap financing for the private investors, combined with guarantees of the floor values of the assets, with a minimal emphasis on co-investing by directly purchasing toxic assets.”

New Poor are Straining Resources at Food Banks Around the Country  |  Crooks and Liars

Now, I know some of you are going to say they make enough money to live and they’re just trying to scrounge off the system. But that’s unlikely: How many working people want to stand in line at a food bank? People are usually ashamed of needing help. Things are so bad right now for so many of us. Try to have some compassion – it could be you.

• Related link: The Food Banks Fill Up  |  Ezra Klein
• Related link: America on $195 a Week  |  Mother Jones

Against Maturity  |  Overcoming Bias

The most fearsome damage wreaked upon my parents by their concept of “adulthood”, was the idea that being “adult” meant that you were finished – that “maturity” marked the place where you declared yourself done, needing to go no further. … But this is what I think my parents were thinking:  If they had tried to answer a question as children, and then given up as adults – a quite common pattern in their religious decay – they labeled “mature” the place and act of giving up, by way of consolation.  They’d asked the question as children and stopped asking as adults – and the story they told themselves about that was that only children asked that question, and now they had succeeded into the sage maturity of knowing not to argue.

Violent Imagery Leaves Viewers ‘Comfortably Numb’  |  MillerMcCune

Would you help a disabled woman pick up the crutches she dropped outside a cinema? Disturbing new research suggests it may depend upon which movie you just saw. Evidence continues to mount that violent media imagery impacts the behavior of viewers.

Yours, Mine, Ours: When You and I Share Perspectives  |  Physorg

While reading a novel, as the author describes the main character washing dishes or cooking dinner, we will often create a mental image of someone in the kitchen performing these tasks. Sometimes we may even imagine ourselves as the dishwasher or top chef in these scenarios. Why do we imagine these scenes differently – when do we view the action from an outsider’s perspective and when do we place ourselves in the main character’s shoes?