> It's a fine plan, and has the additional merit of requiring the
> nationalization of the banks.
Except it doesn't require the nationalization of the banks.
This is a critical point: the "nationalization" talk we hear these days is controversial because it takes a fairly well understood and containable problem -- insolvent banks -- and attempts to smooth over the distinction between "banks" and the finance behemoths that are really in trouble: Citi, BofA, etc. ... these are decidedly *not* banks. These are huge multinational financial services companies [HMFSC for short!], for which nationalization can't and won't work.
[ See Michael's post from the other day for more detail ...
http://mailman.lbo-talk.org/lbo/Week-of-Mon-20090223/002952.html ]
The US will continue to see some (much smaller, more tradiaitonal) banks get "nationalized" (typically for the weekend) using the FDIC model/mechanism; this is all to the good. Keep it up. But that's not what My Plan was about.
My Plan does, however, have the side-effect of getting both banks and HMFSCs out of the workaday business of owner-occupied house finance. it's clear that it can't survive without government intervention on a regular basis, so let's just cut out the middle-man.
> The difference between the face value of mortgages and the
> rapidly-shrinking underlying value is precisely why the
> US banking system is kaput.
I don't agree with any of that.
/jordan