Sweet sweet communism

U.S. Forces Nine Major Banks To Accept Partial Nationalization

The U.S. government is dramatically escalating its response to the financial crisis by planning to invest $250 billion in the country's banks, forcing nine of the largest to accept a Treasury stake in what amounts to a partial nationalization.

News that European governments also planned to take stakes in their banks and anticipation of new U.S. measures unleashed a tremendous surge in U.S. stock prices yesterday, with the Dow Jones industrial average soaring to the biggest percentage gain since the 1930s, up 11.1 percent. It ended 936.42 points higher, the largest point gain ever, just days after the Dow had its steepest weekly decline in history.

The Treasury Department's decision to take equity stakes in banks represents a significant reversal, coming just weeks after Treasury Secretary Henry M. Paulson Jr. had opposed the idea. In a momentous meeting yesterday afternoon in Washington, Paulson, flanked by top financial regulators, told the executives of nine leading banks that they needed to participate in the program for the good of the national economy, two industry sources said on condition of anonymity because they were not authorized to speak publicly.

Oh happy day. We are at least going to attempt some competent attempt to address this crisis and make an attempt to actually safeguard the $700 billion Paulson has had sitting in his shed for the past couple of weeks. The plan involves buying $250 billion worth of preferred stock, guaranteeing all senior debt, and unlimited FDIC insurance to non-interest bearing accounts. All the other hundreds of billion will remain in Paulson's shed, where he will go every morning to look at in a lustful manner.

But hey, super, every country in the world is partially nationalizing their banks and we decided to do so as well. But there's something I can't quite put my finger on. Oh yes, I thought the giant $700 billion Paulson plan was the be all end all solution concocted by Paulson to solve everything. Now he's convinced this is? Before the Paulson plan he was convinced no action was the correct plan and he let Lehman fail, which ended up revving the crisis into overdrive. So he's been massively wrong twice in the past month over this crisis and got essentially strong armed into this by Chris Dodd, Gordon Brown and the World. He's the guy we want re-writing the plan and doling out the cash to buy equity stakes?

That's why I'm not that excited the government seems to have chosen the correct path. We still have the village idiot leading us down in.