Why nationalize the banks?

Posted on Monday, October 13th, 2008 at 7:46 pm by JTE

Ezra Klein, with the assistance of some blockquoting, explains why the (temporary) nationalization of banks accomplishes more than just loaning/injecting money into them, even for the same overall amount of public money being spent. Doing so is the only way of cutting the “Gordian knot” of distrust between the banks. (Though, if you read the comments to his post, you’ll see a suggestion for an alternative knot-cutting option.) Is inter-bank distrust a big deal? This morning’s NPR story suggests it’s super-duper big.

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