Bank Nationalization

I do not know why libertarian economists are so intent on not nationalizing the banks.

The accounting of the banks is so complex that we could never tell what was legitimately part of the bad assets, and what was simply a bad trade, or even the losing part of a hedge.

We will have a transfer of wealth that approaches 30% of our GDP in any case. We need to structure this transfer so that it does not cause incorrect incentives in the future. Simply buying stuff at artificially inflated prices set by the seller alone is a way to cause incorrect incentives. When the scale of the transfer is a significant proportion of world GDP, we should think hard about who this transfer benefits. We should think hard about keeping market based incentives in place. Without this transfer of bad assets to the the U.S. government, the banks are bankrupt. Shareholders should be wiped out and bondholders written down.