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May 28, 2010

Comments

Prateekbuch

Just to clarify - were these underperforming banks nationalised before, during or after the period in question? Could it not be that the banks were underperforming, therefore nationalised, and then continued to be rubbish by dint of point #1...?

Brian, follower of Deornoth

"Should Europe’s banks be nationalized?"

Only if you want to hand complete control over your life to the State.

Left Outside

Could the write down from state banks have been agreed upon and dealt with mroe quickly than in the private sector. Perhaps they just look worse now becuase they've admitted more now. Stronger supervision may have foreced this, or a more explicit guarantee may have made them less shy.

With private versus public banks, as with the French Revolution, it may just be too soon to tell.

Alex

Er, how about the profit motive?

L

@Chris, you are aware aren't you that British companies (banks included) don't have supervisory boards:

http://en.wikipedia.org/wiki/Supervisory_board

chris

@L - of course, I am so aware - I'm referring to the German position.
@ Alex - it's the profit motive - plus some mix of agency problems and bounded rationality/knowledge that got us into this mess. In the presence of those problems, a little less profit motive might not be a bad thing.
@ Prateekbuch - the banks were state-owned long before the current crisis.
I'd add that there are loads of ways of organizing nationalized banks - a question that doesn't get as much attention as it should.

Mitchell Powell

Thanks to the way central banking works throughout the world, the banks are de facto, nationalized anyhow, because central control makes them in essence branches of the central banking. As long as central banking (a la Federal Reserve) continues to exist, questions about who "owns" banks are really questions of how--not whether--government should run banks.

Alex

Yes, but the profit motive is also what gets the banks to lend and invest and take deposits and so on like they've been doing for centuries to the benefit of civilization. Yes crises happen, but Michael Foot is not the solution.

Oranjd

Alex, a publicly-owned banking sector does not imply an absence of the profit motive - rather that maximisation of profit is likely to be undermined by democratic pressures for the accounting of costs (social, environmental, etc.) that private banks externalise.

Fred Kapoor

This is a very interesting and at the same time broad topic that might take thousands of articles to be covered. It is great to read a good article about it every now and then. I personally agree with @Oranjd "wned banking sector does not imply an absence of the profit motive " and this is not always consider by everyone.

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