That's what I'm talkin' about

In yesterday's post, Guambat took issue with Howard Milstein's plan to have the US government bear the risk of private bank debts.

In prior posts, Guambat examined the British government's plans to nationalize the losses of North Rock bank. Guambat noted the disturbing similarity to nationalizing an industry and having the government nationalize an enterprise's debts.

It seems to Guambat that socialist dictators like Chavez, who seem to want to nationalize one "special" industry after another, are not all that different from the titans of the free market who want the government to prop up their tilted towers when they become weighed down by too much of their own created debt, but they each get a different press.

It is one thing (bad) to nationalize a profitable business but another (good) to nationalize an indebted one.

Milstein's plan to have the government guarantee the banks' bad debts is, it appears, exactly what's going on in England with Northern Rock, as Rock liabilities are reclassified as public sector debt:

[A]t least £90 billion of Northern Rock's liabilities were officially brought on to the public sector's balance sheet.

The Office for National Statistics said the embattled Tyneside mortgage lender would be reclassified as a public financial corporation as from last October, in the wake of the Treasury's promise to underwrite its emergency borrowings from the Bank of England. [Lies, damned lies, and statistics.]

National Statistics said the reclassification "should not be confused with 'nationalisation', which is a term commonly used to refer to public ownership". [Wink, wink, nudge, nudge.]

Goldman Sachs, which has been advising the Treasury, has put together a plan that would see Rock debt, underwritten by Government [a euphemism for "guaranteed"], sold on the public markets.

Northern Rock has been in financial crisis since its emergency Bank loans emerged in September. It found itself in serious financial trouble after becoming over-reliant on borrowing on the wholesale markets [where so much subprime infected CDO debt lives].