Tim Geithner calls do-over

Tim Geithner on Wednesday

Nationalization is "the wrong strategy for the country, and I don't think it's a necessary strategy," Geithner said. He added that a government investment in the banks "does not go to pay dividends or excess compensation." He added: "we want the terms designed so that, as conditions normalize, our support is expensive and unattractive," motivating the banks to replace the government support with private sector investment.

Continuing with his views on nationalization, Geithner said, "governments tend to underestimate the scales of problem, they move too slowly, they're too tentative and gradual, they escalate late, and that makes crises deeper."

Tim Geithner today

"We're totally gonna buy up 30%-40% of Citigroup. Nationalization baby, let's have sex in the streets! By the way, has anyone seen that Tim Geithner impersonator that keeps going on TV and saying crazy shit?"

Now I'm sure he's got some legalese and fancified Wall Street word wrangling, but anyone want to explain to me how a government buying 40% of a company, eliminating dividends, and replacing most of the board isn't nationalization? Especially when the move is for a higher risk higher reward move of buying common stock? Not that I'm against nationalization. Krugman is for it and it's what worked in Sweden and eventually in Japan. But it does kind of worry that the guy running things says one thing one day and then decides to do the opposite (or 40% of the opposite) the next day. Doesn't well you up with confidence.