The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: orkrious who wrote (185630)	2/21/2009 5:41:52 PM
From: patron_anejo_por_favor	Read Replies (2) of 306849

Nationalization is a bit too imprecise, though, and it's a buzzword that's been tossed around. I agree that if Strangelove comes up with anything that seems like it might work, the market will respond favorably. Including a Buiter-Meredith Whitney kind of plan, ie, absorb the insolvent banks if they fail the stress test.... and liquidate the bad assets over time a la RTC. Then focus on capitalizing the survivors (without necessarily forcing them to take government funds in exchange for equity i.e, no broad nationalization). The sooner the better, IMO. This puts the bad liabilities on the taxpayers, but realistically they are there anyway. At least it quarantines them from the rest of the banking system, allowing it to function more freely. I think this will be a great deal more expensive than Buiter estimated though, probably multi-trillions instead of 350 billion, but that remains to be seen. If something like this is implemented, you'd want to own the stocks of likely survivors ahead of the announcement. We should probably be trying to identify them as a potential speculative trade.

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