Nouriel Roubini is a Professor of Economics at NYU, and is has been forecasting this econcomic meltdown for some time. It has earned him the nickname of “Doctor Doom”.
To Mr. Roubini, the most interesting question isn’t the one of who got it right. Instead, he asks why we “over and over again, get into these periods of irrational exuberance, when not only is there an asset bubble and a credit bubble, but people believe these are sustainable over a long time — Wall Street, policy makers, rating agencies, academics, journalists . . . .”
This article is worth reading in its entirety, and I hope you do, but here are the key quotes that relate to Mr. Roubini’s belief that many – or maybe all? – banks will be nationalized within six months:
—“… [if] you take banks over, you clean them up, and you sell them in rapid order to the private sector — it’s clear that it’s temporary.”
—“The kind of government interference in the economy that we saw in the last year of Bush was unprecedented. The central bank — supposed to be the lender of the last resort — became the lender of first and only resort!”
—“People like [Senator Lindsey] Graham and [Former Federal Reserve Chief Alan] Greenspan have already given their explicit blessing. This gives Obama cover [to nationalize banks]. I think that we’re going to see [banks nationalized] in the next few months . . . in six months or so.”
—“We started with banks that were too big to fail, but what has happened, in the process, is that these banks have become even-bigger-to-fail. J.P. Morgan took over Bear Stearns and WaMu. BofA took over Countrywide and then Merrill. Wells Fargo took over Wachovia. It doesn’t work! You can’t take two zombie banks, put them together, and make a strong bank. It’s like having two drunks trying to keep each other standing.”
I have seen Mr. Roubini many times on Charlie Rose, and he is usually the opinion leader on the panel as being the person who was right. I’m not sure how to summarize any better the article than the quotes above do. I have edited the quotes down.
In this article, Roubini faults journalists for being cheerleaders during these bubbles instead of asking tough questions. I think that’s an excellent point.
Lastly, I would like to include this information from a different post I saw on Naked Capitalism which I believe likely plays a factor into why banks aren’t being “taken over” perhaps more quickly:
