If fears of nationalization drove this week's stock market decline, then shareholders should brace themselves, says the economist they call “Dr. Doom”: Nationalization is, at this point, the only solution. New York University economics professor Nouriel Roubini, “the nearest thing to a rock star among the economists,” emphasizes why nationalization is necessary in an interview with The Wall Street Journal. “The idea that government will fork out trillions of dollars to try to rescue financial institutions, and throw more money after bad dollars, is not appealing because then the fiscal cost is much larger. So rather than being seen as something Bolshevik, nationalization is seen as pragmatic. Paradoxically, the proposal is more market-friendly than the alternative of zombie banks." He says he expects nationalization six months from now. “Six months from now," he replies, "even firms that today look solvent are going to look insolvent. Most of the major banks -- almost all of them -- are going to look insolvent. In which case, if you take them all over all at once, you cause less damage than if you would if you took over a couple now, and created so much confusion and panic and nervousness.”
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