Wednesday, December 19, 2007

Soothe the markets, nationalise the banks

There's nationalising and then there's nationalising.

Typically, whenever any country talks about nationalizing all or part of any industry, or even hint at the "N" word, the markets run for the woods. Think socialism. Think Chavez and the oil industry. Bad.

Now, speak of privitizing an industry, and that's another thing. A good thing.

But having the "nation" doing the "privatizing" is a bad thing. It takes the profits out of private hands and hands them over to some of the world's worst managers -- government leaders. Privatization puts those profits back into the hands of the world's best managers -- corporate leaders.

(Guambat is being merely cynical here, not really suggesting that popularly elected politicians make good business managers, just pointing out that privately appointed corporate leaders do not automatically come with any divine inspiration or devotion, either.)
But over in Jolly Old England they've been happily and openly discussing the very real possibility of privatizing Northern Rock bank, and presumably any other bank for which Northern Rock nationalisation may set a precedent.

Today, Sam Jones reports in FT Alhpaville that Bank of England Governor Mervy King has reiterated
“If -and I stress if - we were to get to nationalisation, it would be a very good way of breaking the logjam.”
And the markets shrugged.

You see, this is not really any kind of nationalisation (or nationalization as far as that goes). This is the "free market" kind of nationalisation whereby you socialise the expenses and privatise the profits, and that's a good thing -- for the markets.

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