Especially in the UK, the impression that the gov't backs all liabilities ($ and Euro denominated to a large part) of its big banks, threatens even the credit worthyness of the gov't. In case of an insolvency, you could guarantee with some hair cut on bond holders and excessive pay. In case of Ireland I'm not sure, but there is as well some potential that the guarantees for the banks threaten the solvency of the state.
And then you have to scale down the financial sector. I predict, that this is done totally unsufficient, when the whole financial industry is in the hands of the gov't.
And by the way. In Germany 100% public owned banks control nearly half the market (and of course I have my account at a public bank). Wiki claims Sparkassen finance to 42% medium sized enterprises, they have the most private accounts, and there are other large players with partial public ownership (even before the current mess. By now I'm not sure, if there is any bank left without a public share). Overall the public banks in Germany have done considerable worse than those that were fully private before the current mess. If someone would take a Landesbank for 1 Euro, I would advocate even now privatisation. Unfortunately I doubt anybody would take a Landesbank even for that right now.
The muddling with the banks that we already have seen of course is not libertarian at all. It is a corporatist fusioning of state and big banks. I could as easily argue it is close to the mindset of communists as somebody can claim it would be libertarian. The redistribution of wealth to people, that neither need it, nor have earned it, occurs as well, when taking 100% stakes instead smaller shares. Der Amerikaner ist die Orchidee unter den MenschenVolker Pispers
There are precedents. Cuba (IIRC), after one of the Spanish-American wars. Argentina, more recently. Russia also had a sovereign default in the late Yeltsin years.
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
