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"The government has already taken over the financial system," Roubini says, noting U.S. policymakers have committed $9 trillion to rescue the financial system and already spent $2 trillion. "So let's stop the delusion about 'no nationalization.'" Economist Nouriel Roubini explains why full nationalization (as opposed to partial) is the free-market friendly way forward. Includes video interview with Roubini as well as important links. Roubini, who has publicly advocated for temporary nationalization of insolvent banks, says fully nationalizing Citigroup and/or Bank of America would have a minimal effect on the Dow, which is a price-weighted average. More importantly, he believes full nationalizations (vs. the current partial, piecemeal effort) would be better for the market and the economy because it's the first step in the process of cleaning up "bad" banks so they can later be sold back to private investors, i.e. "re-privatized", as was the case last year with IndyMac.

Excellent review of Japan's "Lost Decade" and the current Obama socialist folly of creating similar "Zombie Banks". Baker sites the evidence of ".... a mountain of toxic assets, housing market declines, a sharp economic recession, rising unemployment and increasing taxpayer exposure through guarantees, loans, and infusion of capital - strongly suggests that some American banks face a solvency problem and not merely a liquidity one...." He recommends the Nouriel Roubini plan, a harsh course of action but one that would get the job done. "......This approach is not pretty or easy. It will cost a lot of money, with the lion's share coming from US taxpayers, at least in the short to medium term. But the alternative - a piecemeal pumping of more public money into insolvent banks in the vague hope that things will improve down the road - could truly be historic folly. Eventually our banks and economy will start to recover. When they do, we would be wise to avoid another Japanese mistake - raising taxes. To counter mounting debt created by government stimulus packages, Japan increased taxes in 1997. Consumption dropped and the country's economy collapsed. Our ad hoc approach to the banking crisis has helped financial institutions conceal losses, favoured shareholders over taxpayers, and protected senior bank managers from the consequences of their mistakes. Worst of all, it has crippled our credit system just at a time when the US and the world need to see it healthy.